JLR Saves The Day For Tata Motors (As Usual)

Tata Motors has been witnessing a lope-sided trend in sales. Its standalone performance has been extremely poor due to several factors like a stale product range, gaps in product portfolio and weak macroeconomic conditions. At the same time, the performance of JLR (Jaguar Land Rover) has been extremely robust, thanks to the success of models like Range Rover Evoque and the demand from emerging economies.

A few days ago, Tata Motors announced its sales volume figures for March 2013. This data showed a decline of 27.59% in total sales. Sales of passenger vehicles declined by 66.62% on a YoY basis and that of medium and heavy commercial vehicles declined by 32.40%. In FY13, sales volumes of Tata Motors have registered a decline of 10.66% over the previous year.

Over the last few months, a completely contradictory trend is being seen in the sales of JLR, which have grown by 22.50% in FY13 over the previous year. This growth is being supported by the success of models like Jaguar XF, Freelander and Range Rover Evoque which have seen growth of 15.4%, 14.4% and 118.61% respectively. Geographically, sales have been uniformly robust all over the world. China has been growing by leaps and bounds, registering 48.10% growth in FY13, over the previous year.

In March 2013, the outperformance continued for JLR with total sales growth of 16.4% over March 2012. On a yearly basis, Jaguar sales increased by 27.8% and that of Land Rover escalated by 14.1% in March 2013. China, which was hit in February 2013 due to the Chinese New Year holidays, bounced back in March 2013, and grew by 22.3% over March 2012.

Owing to the above trends, the financials of Tata Motors on a standalone basis have taken a massive hit. However, since JLR contributes to 65-70% of Tata Motors’ consolidated revenues and over 90% of its profitability, Tata Motors has been strong in terms of consolidated performance. This trend will evidently seep into Tata Motors’ Q4 results and thus its FY13 figures. However, this time, there will be a hit on the margins because of the higher volumes of lower margin models like the Jaguar XF, Freelander and Range Rover Evoque.