The automotive sector in India is a key driver of economic growth and provides employment to millions. With rising disposable incomes and easier access to financing, car ownership in India is projected to rise substantially over the next decade. This presents lucrative investment opportunities in auto stocks that are well-positioned to capitalize on the industry’s growth. After careful analysis, Tata Motors and M&M emerge as the top two automotive stocks for investors to consider.
1. Tata Motors:
- Tata Motors, the domestic market leader
Tata Motors has a strong presence in the commercial vehicle and passenger car segments. Its commercial vehicle market Tata Motors share price stands at 44% due to the highly popular Tata Ace small commercial vehicle. On the passenger vehicle front, Tata has seen a smart turnaround with successful launches like the Nexon, Harrier, and Altroz. From just 5% in FY19, Tata’s passenger vehicle market share improved to 10% in FY22. New product launches and aggressive pricing have enabled Tata Motors to gain traction.
- Tata Motors, a pioneer in electric vehicles
Tata Motors is also making determined strides towards electric mobility. It has launched the Nexon EV and Tigor EV, targeting the personal electric car segment. To tap into electric bus demand, Tata Motors has tied up with state transport undertakings to supply electric buses under the FAME scheme. As the shift towards electric vehicles gathers pace, Tata Motors, with its early mover advantage, is well-poised to consolidate its position.
2. M&M:
- M&M, a Diversified Conglomerate
M&M is a diversified conglomerate with a presence across farm equipment, automotive, financial services, and IT sectors. However, its core business remains automotive, which accounts for over 70% of revenues. M&M is the leader in the important SUV segment, with a 40%+ market share. New SUV launches like the XUV700 and Thar have received an enthusiastic response, enabling M&M to regain lost market share.
- M&M: Electric Vehicle Plans
To tap the electric vehicle opportunity, M&M has launched e-versions of its popular models like the XUV400 and eKUV. It aims to have an EV portfolio of 6–8 models by 2026–27. M&M is also targeting a strong play in the last-mile mobility space with its stake in EV makers like Switch Mobility.
- M&M: Competitive Position in the Farm Equipment Space
The company enjoys a strong competitive position in the farm equipment space as well as market leadership in the domestic tractor market. The management has guided for another good year for the tractor industry on the back of healthy reservoir levels and rabi sowing.
Conclusion
The Indian automotive industry is on the cusp of disruption, led by trends like electrification, tighter emission norms, and connected vehicles. In this dynamic environment, Tata Motors and M&M share price have several competitive advantages that make them attractive investment bets. Their strong brand equity, wide distribution network, aggressive product launches, and future-focused strategies give them an edge over other players. Investors with a moderate-to-high risk appetite can consider investing in these auto majors to benefit from the industry’s growth potential. However, given the disruptive forces, it is important to have an investment horizon of at least 3–5 years.
