Tata Motors' profit in the quarter that ended March declined amid the decreasing demand in China for Jaguar Land Rover vehicles. In the latest quarter, Tata Motors’ net income decreased by 56% to 17.2 billion rupees ($269 million), from 39.2 billion rupees the previous year. In a statement last Tuesday, Tata Motors said that profit at the Jaguar Land Rover unit decreased by 33% to 302 million pounds ($465 million).
When compared to the same quarter last year, the retail sales volume of Jaguar Land Rover in the past quarter fell as it was driven down by a decrease in demand for luxury vehicles in China. Another factor that adversely affected Tata Motors' earnings was a persistent slump in sales of its light commercial vehicles in its home market India.
In the quarter, the revenue of Tata Motors climbed by 3.5% to 675.8 billion rupees. Meanwhile, Jaguar Land Rover sales rose by 8.9% to 5.83 billion pounds. Tata Motors’ statement further reveals that the profit of JLR before tax declined by 31% due to higher depreciation and amortization, as well as "unfavorable revaluation of foreign currency debt and unrealized hedges that are not eligible for hedge accounting treatment."
At Tuesday’s press conference, head of treasury Vijay Somaiya said that JLR is planning to spend up to 3.8 billion pounds in the year started April 1. Somaiya added that the company will continue to monitor the soft market conditions in China. JLR started to sell Evoque built in China last February.
He said that the launch of new models as well as conditions in China and Russia may result to a drop in Ebitda margins for JLR in the present fiscal year. JLR CEO Ralf Speth said that the pricing in China hasn’t changed. He added that the company is “cautiously optimistic” that along with its joint venture partner, their business and market share in China will expand.
The luxury unit is confident that with new models like the entry-level Jaguar XE sedan and the Discovery Sport from Land Rover, its sales will increase to a record of over 500,000 vehicles this year. Tata Motors’ losses (excluding units) rose to 11.6 billion rupees, from the previous year’s 8.2 billion rupees.
Tata Motors said that it will not be paying a dividend for the year due to these losses as well as the continuing weak operating environment in the standalone business.