Tata Motors faces early FY26 setback: Are EV and CV sales slipping too far behind?

Why Did Tata Motors Report Lower Sales in April 2025?

Tata Motors Limited, one of India’s leading automotive manufacturers, posted total sales of 72,753 units in April 2025, down 6% from 77,521 units reported during April 2024. The contraction stemmed from subdued domestic demand in commercial vehicle (CV) and passenger vehicle (PV) categories, particularly within the small commercial vehicle (SCV) and electric vehicle (EV) segments. Despite export growth in some verticals, the company began FY26 on a softer footing, reflecting broader auto sector pressures, ranging from rural consumption slowdown to volatile EV incentives.

How Did Domestic and International Sales Break Down?

Domestic sales stood at 70,963 units, a 7% decline from 76,399 units in the prior year. The remaining 1,790 units were contributed by international business (IB), reflecting marginal growth over last year’s overseas numbers. Notably, exports of passenger vehicles jumped over 233% year-on-year, from 100 to 333 units, helping offset some of the domestic contraction.

Despite that international boost, total passenger vehicle (PV) sales—including electric vehicles—declined by 5% to 45,532 units, compared to 47,983 units a year earlier. Commercial vehicle (CV) sales stood at 27,221 units in April 2025, representing an 8% year-on-year fall from 29,538 units.

What Are the Trends in Commercial Vehicle Sales?

The commercial vehicle portfolio saw mixed trends. While domestic CV sales dropped by 10% to 25,764 units, international CV volumes rose 43% to 1,457 units. The steepest drop was seen in the SCV and pickup segment, down 23% year-on-year to 9,131 units from 11,823. Heavy commercial vehicle (HCV) truck volumes declined by 8% to 7,270 units.

Conversely, ILMCV (intermediate, light, and medium CV) truck sales increased by 8% to 4,680 units, and passenger carrier sales grew by 4% to 4,683 units, showing relative resilience within the CV product mix.

Domestic sales of medium and heavy commercial vehicles (MH&ICV), including trucks and buses, declined slightly to 12,093 units from 12,722 units. Total MH&ICV sales, including exports, came in at 12,760 units—down from 13,218 units last year.

What Was the Performance of Tata Motors’ Passenger Vehicle Business?

Domestic passenger vehicle sales, including EVs, fell 6% year-on-year to 45,199 units from 47,883. When international business is included, total PV sales dropped 5% to 45,532 units. A major driver of this fall was the underperformance of the electric vehicle segment.

EV sales—including both domestic and international units—stood at 5,318 in April 2025, down 16% from 6,364 units in April 2024. The EV segment, once a bright spot, showed early signs of softness due to reduced subsidy tailwinds, growing affordability concerns, and intensifying market competition from newer entrants and foreign OEMs.

What Are Analysts Saying About Tata Motors’ Performance?

Brokerage houses have flagged the April numbers as a “watchlist event,” suggesting that April’s slowdown is likely transitory but worthy of closer scrutiny. Domestic research firms including Kotak Securities and Motilal Oswal have maintained “Hold” ratings, noting that volume softness was largely anticipated due to lower pre-buying activity post-financial year-end and fewer working days in April.

International brokerages like Jefferies and UBS, which had previously rated the stock as a “Buy” on structural EV and premiumisation themes, have taken a wait-and-watch approach pending Q1 FY26 earnings. Analysts believe that Tata Motors’ long-term prospects remain intact, but near-term headwinds in the domestic EV and SCV segments could pressure margins.

What Are Institutional Investors Doing with Tata Motors Stock?

The immediate market response to the sales release was neutral to mildly negative. Tata Motors stock traded in a narrow band between ₹1,070 and ₹1,095 on the NSE in the sessions following the May 1 announcement. The muted reaction suggests the figures were broadly in line with expectations, but investor enthusiasm is cooling amid uncertainty in rural recovery and slowing EV adoption.

Foreign Institutional Investors (FIIs) showed minor outflows in April across the auto sector, including marginal stake reductions in Tata Motors as per NSE bulk deal data. Key FII holders like Vanguard and Capital Group have retained core positions, underscoring long-term confidence, especially with Jaguar Land Rover’s (JLR) global profitability acting as a stabiliser.

Domestic Institutional Investors (DIIs), including mutual funds and insurance firms, appear to be trimming exposure selectively. Several large-cap funds holding Tata Motors continue to show it among top 10 holdings, though inflows have slowed post-March 2025.

Overall, institutional flow sentiment appears neutral with a slight downward bias, consistent with broader auto sector fatigue in early FY26.

Is Tata Motors Still a Buy After April 2025?

For short-term traders, Tata Motors currently presents a wait-and-watch case. With no immediate upside triggers, and macro headwinds still present, many are advised to avoid fresh longs until more clarity emerges from May and June sales trends. Technically, ₹1,020–₹1,040 is seen as a key support zone. Any breach below this level could trigger further selling pressure.

Long-term investors, however, may find value in selectively accumulating at dips, especially given Tata Motors’ leadership in the domestic EV market and its expanding international footprint. Analysts expect the company to rebound in the second half of FY26 as infrastructure spending rises and policy visibility improves post-elections.

How Does This Set the Tone for FY26?

Tata Motors’ April report signals a cautious start to FY26. Domestic demand weakness, especially in small CVs and EVs, coupled with EV cost and policy-related ambiguity, have created a challenging environment. However, performance in ILMCV trucks and the jump in international PV and CV volumes offer tactical resilience.

Going forward, management is expected to focus on re-accelerating EV momentum with the rollout of its Gen-3 architecture vehicles and investing in cost rationalisation. On the CV side, competitiveness against rivals like Ashok Leyland and Mahindra Trucks will hinge on telematics integration, uptime support, and fuel efficiency innovations.

With a rich product pipeline, Tata Motors is likely to lean on strategic launches, supply chain optimisation, and JLR cash flow strength to buffer domestic volatility.