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Tata Motors is adapting its strategy to changing consumer preferences in the Indian auto market by focusing on key areas such as the premium hatchback segment, SUVs, and electric vehicles (EVs), while also addressing the evolving market dynamics like the rise of tier-2 cities and the changing consumer profile. BusinessLine spoke to Vivek Srivatsa, Chief Commercial Officer, Tata Passenger Electric Mobility, on the sidelines of the launch of the Altroz facelift. Managing Director Shailesh Chandra also highlighted the refreshed Altroz as key to their strategy.
Here are the details of their adapted strategy:
While the overall hatchback segment is declining and has shrunk significantly from 50% of the industry 10 years ago to 21-22% today, Tata Motors believes the degrowth has stabilised for now around 20% of the industry.
Within the hatchback category, there is significant de-growth in the entry hatch segment (sub-₹6 Lakh), but the premium hatchback segment is growing. It is the largest sub-segment within hatchbacks by value (over 32%) and volume (about 3.5-4 Lakh units per year).
A shift is visible, where many first-time car buyers are directly purchasing cars in the premium hatchback category. These consumers are often aspirational and compare options available in the SUV segment. About 70% of Altroz buyers are first-time car buyers, a significant increase from the previous 40%.
Tata Motors is eyeing growth specifically in this premium hatchback segment. With the refreshed Altroz, they reportedly aim to double their market share from the current 12% to closer to 30% this year. They are optimistic the Altroz facelift will have a big impact in this segment.
The Altroz facelift is being positioned for consumers looking for a premium first car purchase.
Tata Motors has taken cognisance of consumers comparing premium hatchbacks with SUVs and has loaded the Altroz as a complete product offering.
They have invested heavily in safety, making six airbags standard and highlighting its 5-star GN Cap rating.
Features typically available in compact and mid-size SUVs have been incorporated into the Altroz, combined with its premium looks.
The refreshed Altroz is considered key to regaining lost ground in both volumes and market share after a challenging FY25 where Altroz volumes halved due to its ageing lifecycle.
The premium hatchback market, which was once metro-centric (top six-eight cities), now sees tier-2 markets selling more units. There is a huge homogenisation across markets.
Tata Motors already has a strong presence in tier-2 and tier-3 markets. They are optimistic about making a big impact in this segment with the enhanced Altroz.
A significant reason for Tata Motors' decline in hatchback sales (>30%) in FY25 was the aging of two key products, the Tiago and the Altroz, both in their fifth year and requiring major intervention.
They have addressed this with a model-year intervention for the Tiago in January 2025, which saw a significant volume jump.
The Altroz now comes with a strong refresh to counter its earlier decline.
They have a strong product pipeline for FY26, including one or two more refreshes, expansion of the EV portfolio (Harrier EV, Sierra EV), and a new ICE nameplate (Sierra ICE).
The transition to SUVs is a worldwide phenomenon, impacting India as well.
Tata Motors continues to ride the success of the Punch and Nexon models.
In FY25, they achieved industry-beating growth in the SUV segment (nearly 11.5% to 12%), offsetting some of the decline in hatchbacks.
New SUV launches like the Sierra (ICE and EV) are expected later in FY26.
The electric vehicle industry is growing, with more players entering and competition intensifying.
Tata Motors is segmenting the EV market into entry (< ₹12 Lakh), mid (₹12–20 lakh), premium (> ₹20 Lakh), and fleet.
They hold a dominant position (75% share) in the entry segment with the Tiago and Punch EVs. They plan to enhance the value proposition of these models further.
They aim to regain lost market share in the mid-segment (₹12–20 Lakh), where competition is intense, by strengthening the value offered by Nexon and Curvv.
They will enter the premium segment (> ₹20 Lakh) with strong products like the Sierra EV and Harrier EV.
In the fleet segment, they are working to make their EV offerings deliver value comparable to CNG vehicles.
Their mid-to-long term aspiration is to hold a 50%+ market share in the EV market.
In summary, Tata Motors is adapting by acknowledging the overall shift towards SUVs, focusing their hatchback efforts on the growing premium segment with refreshed products like the Altroz loaded with modern features and safety, expanding reach into non-metro markets, leveraging their strong position and pipeline in the SUV segment, and developing a multi-segment strategy to maintain leadership in the competitive EV market. They aim for industry-beating growth and increasing market share throughout FY26.
Disclaimer: This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.
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