Companies

Tata Motors volumes hit by China slump

| Updated on: Aug 07, 2015

For the three months ended June 2015, consolidated net profit of Tata Motors have halved to ₹2,769 crore compared with the same period in 2014.

With the standalone operations gaining steam, thanks to the turnaround in domestic vehicle sales in recent times, it is the Jaguar Land Rover (JLR) business that has pulled down the bottom line.

In the latest quarter, JLR’s revenue dropped about 6.5 per cent from last year, while net profit dropped 29 per cent.

The operating (EBITDA) margin of 20.3 per cent then, has reduced to 16.4 per cent now. For one, JLR’s subdued volume growth can be a reason for the lacklustre performance.

With the discontinuing of the Freelander, and older models of the XF and XJ, retail volumes of Land Rover grew by less than one per cent, while that of Jaguar’s dropped by 7.4 per cent. The new XE too, is yet to see a full quarter of sales. Secondly, even as markets such as North America, the UK and Europe showed good growth, China has slowed considerably. From about 30 per cent a year ago, China’s share in global sales has come down to half of that now.

Besides pricing pressures at a time when China has slowed, the company is also bearing the burden of the initial set up and production ramp up costs at its joint venture for local manufacture of vehicles in China.

Besides, slow increase in local production of the in-demand Range Rover Evoque and lower imports of the new Discovery Sport (so as to not upset the plans for local production of the same) have also cost JLR dear.

The China factor may continue to impact JLR’s volumes and margins in the months to come. But domestic operations may provide solace, thanks to improving commercial vehicle and passenger car sales in India.

Published on January 23, 2018

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

COMMENTS
This article is closed for comments.
Please Email the Editor

You May Also Like

Recommended for you