The supplies of the Tiago, the recently-introduced hatchback by Tata Motors, have been impacted due to a mismatch in demand and supply with more customers opting for petrol cars over diesel.
The demand for petrol cars can be attributed to the narrowing gap between the prices of the two fuels and a ban on diesel cars in the National Capital Region (NCR) and some other parts of the country. Besides, diesel cars cost at least Rs 75,000-1,00,000 more than petrol cars.
Tiago, which was introduced on April 6, 2016 following a name change from Zica, has received over 20,000 bookings but deliveries have been slow as the company was not prepared to manufacture such a large number of petrol cars to meet the change in preference.
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Tata Motors is ramping up production of petrol cars and supplies are likely normalise in eight weeks, a top company executive said.
“Tiago has exceeded our expectations. We have received 20,000 orders since we launched the car. This is significant. But we do see a clear trend towards petrol. Almost 70-80 per cent of the cars on order are for the petrol engine. It came as a major surprise,” Guenter Butschek, Managing Director, Tata Motors said at the company’s annual results press conference on Monday. Tata Motors is known for its diesel engines and going by the previous years’ trends, it had anticipated a greater demand for diesel engines and scheduled production accordingly.
“We are expanding capacity and have gone in for the second shift at Sanand to produce more cars. We are trying to address the bottleneck and in the coming weeks there will be a significant increase in output,” Mr. Butschek said.
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He said though the company has received over 1.4 lakh enquires for the Tiago, it would rather concentrate on improving the supply situation before trying to convert the inquiries into sales. He said more Tiagos will be seen on the road in eight weeks.
Tata Motors is perhaps not alone in seeing a spike in demand for petrol cars. All automobile companies with new models have been impacted by the sudden preference for petrol cars, said Abdul Majeed, Leader, Automotive at PwC.
“Most new models are struggling. All OEMs are affected. While some are admitting this, others are not. The suppliers are not prepared to adjust so quickly. They normally have a three-month schedule. This has created a bottleneck. The supply system is not able to cope,” Mr. Majeed said.
The recent orders of the Supreme Court and the National Green Tribunal (NGT) imposing a ban on diesel vehicles has created uncertainty in the minds of buyers, which is why a lot of people have shifted to petrol engines, he added.
“Even people who are buying small cars are opting for petrol cars as they don’t want to take any chances. The government is imposing more tax on diesel. People are changing orders in the last moment even after the vehicle has come to the depot for delivery. Some fleet owners who had booked diesel cars are also going in for petrol cars,” Mr. Majeed said.