Improved JLR sales cushion impact of domestic market slump for Tata Motors in Q3 FY2020

by Shahkar Abidi 30 Jan 2020

Tata Motors has reported a net profit of Rs 1,738.3 crore for the latest Q3 FY2020  (October-December 2019), compared to a loss of Rs 26,933 crore during the same period in FY2019. This substantial profit is primarily due to an improved performance by Jaguar Land Rover.  JLR revenues increased to 6.4 billion pounds sterling, up 2.8% year-on-year. While total retail sales fell 2.3%, sales in China were up 24.3% and sales in North America increased by 1.1%. Margins also turned positive year-on-year with an EBIT margin of 3.3% and an EBITDA margin of 10.8%.

On the standalone basis, Tata Motors' sales during Q3 FY2020 (including exports) decreased 24.6% to 129,185 units. In the domestic market, the M&HCV segment saw a de-growth of 47.7%, ILCV trucks slumped 15.7%, SCV and pick-up vehicle sales were down 6.1% and CV passenger sales fell 25.6%. Domestic passenger vehicle volumes were also down 26% and revenue for the quarter decreased 33% to Rs 10,800 crore due to decline in M&HCV volumes, stock correction and negative operating leverage.

According to Guenter Butschek, CEO and MD, Tata Motors, the downturn in the automotive industry continued in Q3 as the India economy slowed down. “Despite gaining sequential market shares in M&HCV, ILCV and SCV this quarter, our financial performance was impacted due to the downturn coupled with the inventory corrections we took to get ready for BS VI. Our focus on retail acceleration and system stock reduction helped us achieve a multi-quarter low inventory level in CV and PV, while simultaneously getting ready for a smooth transition to BSVI. We have taken the BSVI transition not only as a mere compliance agenda, but, have gone beyond and provided exciting value enhancements packaged in a completely new product portfolio. We are confident that this approach will reap us rich rewards in the coming quarters.”

“As the sales upbeat of the festive months could not sustain, we remain concerned about the intrinsic demand and weak consumer sentiment. However, we expect a perceptible improvement in demand outlook as the infrastructure investments announced by the government pick up pace. We also anticipate further measures in the Union Budget to boost consumer sentiment and spur growth,” added Butschek.

JLR sees sales recovery in China
Jaguar Land Rover's CEO Prof Sir Ralf Speth, who earlier today formally announced his decision to step down in September, commented, “In the third quarter, Jaguar Land Rover sustained year-on-year revenue and profit growth as we continued to transform our business. Conditions in the automotive industry remain challenging but we are encouraged by the recovery in our China business and the success of the new Range Rover Evoque. Our proactive and decisive actions are creating a more robust, resilient business, transforming today for tomorrow. Our improving financial results and the cost and cash flow achievements of Project Charge will support the next phase of our pipeline of exciting new vehicles and technologies, with a choice of outstanding electrified, petrol and diesel powertrains. This combined success is enabling us to lay the foundations for long-term growth as we move purposefully towards Destination Zero - our mission to shape future mobility with zero emissions, zero accidents and zero congestion.”

Also read: Jaguar Land Rover CEO Ralf Speth to step down in September