The Hindu Business Line : JLR sales down in traditional markets, but up in Russia, China

Chennai, June 28 Ever since Tata Motors acquired Jaguar and Land Rover in June 2008, sales of these two iconic brands have fallen in their traditional markets – the US, the UK and Europe (excluding Russia) – while they have increased in Russia and China, albeit on a much smaller base.

Between June 2008 and March 2009, Jaguar and Land Rover sales fell by 35 per cent in the US, the UK and Europe, over the previous corresponding period, but increased by 8 per cent in Russia and China.

Pulled down by the performance of Jaguar and Land Rover business, Tata Motors posted a Rs 2,505-crore consolidated net loss in 2008-09, with Jaguar Land Rover (JLR) accounting for a loss of Rs 1,777 crore.

Sales figures obtained from a Tata Motors’ presentation to analysts on Friday, after it announced its consolidated financial results for the year, show that the fall in sales is much steeper at 38 per cent for Land Rover, a premium sports utility vehicle, and 0.70 per cent for Jaguar, the luxury car.

While the sales increase in Russia and China is bound to bring some cheer to Tata Motors, the total base in these two countries is much smaller than the US, the UK and European markets put together. With sales of 24,600 units in June 2008-March 2009 period, Russia and China together accounted for nearly 17 per cent of Jaguar Land Rover sales, against sales of 22,600 units or 13 per cent of total sales in the previous corresponding period.

The presentation – a copy of which is available on the company’s Web site – shows that JLR’s retail volumes fell 37 per cent in North America in the June 2008-March 2009 period over the previous corresponding period. It fell 31 per cent in the UK, 37 per cent in Europe (excluding Russia) and increased 12 per cent in Russia and 2 per cent in China, during the same period.

In North America, Jaguar and Land Rover together sold 34,900 units in the June 2008-March 2009 period against 55,600 units in the corresponding previous period, 40,500 units in the UK (59,100 units), 45,900 units in Europe (73,000). In Russia, sales grew to 15,800 units from 14,000 units, and to 8,800 units in China from 8,600.

According to the presentation, JLR’s response to the fall in sales, triggered by the global economic meltdown, is to align production with demand – resorting to single shifts and down time at all three UK assembly plants. It has taken steps to reduce working capital – supplier payment terms extended from 45 days to 60 in line with industry standard; receivables reduced by £133 million, from 38 days to 27 days; and, inventory reduced by £217 million, from 70 days to 50. Tata Motors has also reduced costs across all areas of the business.

The presentation says that Tata Motors had a total long-term debt of Rs 16,302 crore as on May 31 with Tata Motors’ standalone debt being Rs 11,593 crore and that of Jaguar Land Rover UK at Rs 4,709 crore. The company has a staggered repayment schedule with 11 per cent of the debt due to be repaid in FY10, 39 per cent next year, 12 per cent the following year and the last instalment of 8 per cent due to be paid back in FY16.