Tata Motors Ltd , India's biggest automaker by revenue, reported a surprise 56 percent drop in quarterly net profit on Tuesday, hit by cooling demand for its sleek Jaguar saloons and sporty Range Rovers in the key Chinese market. The company said it expected mixed economic conditions in China, the world's largest auto market, and other emerging economies to weigh on EBITDA margins for the fiscal year that started on April 1 compared with a year ago.
Jaguar Land Rover's sales in China, which had propped up group earnings in recent years, fell by a fifth to 23,526 vehicles, versus a 36 percent increase in the year-ago quarter. Ralf Speth, JLR chief executive, noted the auto industry in China as a whole is struggling but was optimistic on the group's potential to grow given its low market share and strong product range. Car sales as a whole in China grew 3.9 percent in the January to March quarter against the 7 percent growth projected for 2015 by the China Association of Automobile Manufacturers (CAAM) industry body.
Tata Motors posted consolidated net profit of 17.17 billion rupees ($268.3 million) for the fiscal fourth quarter to March 31, falling short of average analyst expectations of 40.95 billion, according to data compiled by Thomson Reuters. Consolidated net sales rose 4 percent to 672.98 billion rupees. Profit at the JLR unit fell by a third to 302 million pounds ($465.3 million), even as the operating margin rose 200 basis points to 17.4 percent due to a more profitable product mix.
The slowdown in China has forced automakers such as General Motors and Ford Motor Co to cut prices, but Speth said the company had not so far followed suit. In February, JLR started selling its locally made Range Rover Evoque in China, expected to ramp up volumes. JLR will also focus on expanding sales of its Jaguar XE, nicknamed the "baby Jag" because of its compact size and price. The loss at Tata Motor's India business widened to 11.64 billion rupees from 8.17 billion due to high depreciation and amortisation costs.
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