Tata Motors Banks on Festive Season to Reignite Domestic Auto Demand

After a soft Q1 marked by weak passenger vehicle sales and flat small commercial vehicle volumes, Tata Motors is placing its bets on a festive season rebound to revive domestic momentum. Group CFO P.B. Balaji, during the Q1 FY26 earnings call, expects the market to improve during the festive season. 

Tata Motors reported a consolidated net profit of ₹3,924 crore for the April–June quarter of FY26, marking a 30% decline from ₹5,643 crore in the same period last year. The company attributed the drop to macroeconomic challenges and tariff-related pressures. “Despite stiff macro headwinds, the business delivered a profitable quarter, supported by strong fundamentals. As tariff clarity improves and festive demand builds up, we aim to accelerate performance and regain momentum across our portfolio,” he said. 

He added that with the upcoming demerger of the passenger and commercial vehicle businesses set for October 2025, the company is firmly focused on delivering a strong second-half performance and expects the domestic market to gradually improve as the festive season kicks in. “Tata Motors has taken internal corrective measures after a challenging first quarter,” he said. 

Inventory Tightening and Focus on Retail

Balaji admitted that Tata’s Q1 PV performance was more a result of internal issues than external demand weakness. “The issues that we have are more internal rather than what we see external. Yes, there are external challenges, but we could have done a better job ourselves, so I will be the first one to admit that. We have corrected that, and we are putting in place solid plans to ensure that the focus on Vahan market share, maintaining a tight inventory across the entire chain, including both us and dealers, and ensuring that the profitability of dealers continues to step up,” he said. 

To avoid discount-driven sales pressure, Tata Motors is now focusing more on Vahan-registered retail market share, rather than wholesale numbers. “We’ve now corrected dealer inventory levels and aligned production better with real demand,” he adds. 

Focus on Festive Launches

Despite the Q1 slump, Tata’s electric vehicle business is showing strong traction. In July (post-Q1), the company posted record EV sales of 7,000 units. New products like the Harrier EV and Curve EV have drawn strong early bookings, with more launches, including the Sierra EV, planned through the festive season.

“We expect our EV penetration to continue rising through H2,” said Balaji, citing July's 16% EV share in the PV portfolio as an inflection point. Balaji emphasised that Tata Motors is entering the second half of the year with cleaner inventories, an upgraded product portfolio, and more disciplined retail planning. 

“While the domestic one is likely to gradually improve with the festive season starting, our job will be to continue to focus on strengthening our business fundamentals and mitigate the impact of tariffs by leveraging both the brand strengths that we have and the targeted cost-saving measures," he said.