Slowing Chinese demand hits profit of Tata Motors

Wednesday 03rd June 2015 06:08 EDT

The slowing demand for its luxury Jaguar and Land Rover cars in China has rained heavily on Tata Motors' first quarter net profit, the lowest in the past nine quarters. The company's profit has also been affected by losses at its Indian operations.

In the January-March period, the company's net profit plunged 56.2% to 17.17 billion rupees ($ 268.3 million), on net sales of 672.98 billion rupees, which increased 4% year-on-year. Sales of the marquee model in China, which were healthy for the past few years, fell 20% to 23,526 units against a 36% increase for the same quarter last year. The regions contribution to sales also dipped to 19%, down from 24% a year ago.

Jaguar Land Rover's overall profit fell to 302 million pounds ($466 million) from 449 million pounds a year ago, despite an increase of 200 basis points in operating margin. Despite the slowing down in China's auto industry, Jaguar Land Rover is optimistic about increasing its market share with a strong product range.

"The launch of new products and the new China JV are expected to support the continued growth of Jaguar Land Rover with strong EBITDA margins in the range experienced since JLR embarked on its growth strategy in 2011," the company said in a statement. "As previously indicated, however, model mix and launch costs associated with the new products, as well as the launch and reporting effect of the China JV and more mixed economic conditions, may result in somewhat lower EBITDA margins in 2015-16 than experienced in 2014-15."

Despite a slack in demand for luxury and premium cars in China causing carmakers to slash prices, Jaguar Land Rover says it has not yet taken any decision on cutting prices and would rather watch the market for longer.

comments powered by Disqus

to the free, weekly Asian Voice email newsletter