Tata Motors profit surge

Tata Motors profit tripled to 53.98 billion rupees ($882 million) in fiscal Q1 compared to 17.26 billion rupees a year earlier, surprising analysts with the best result in nine quarters. Revenue increased by 36% to 648.57 billion rupees, India’s largest automaker announced today.

The company’s Jaguar Land Rover business reported a 22% sales increase in the fiscal first quarter (ending June 30). Global sales of its Freelander 2 and Range Rover SUVs (sport utility vehicles) as well as Jaguar’s F-type vehicles helped push up the numbers.

China remains Tata’s largest market, where sales now represent 28.5% of the worldwide total, compared to 21.6% last year.

Weak domestic sales

Strong sales of its luxury vehicles masked a decline in domestic sales. Total vehicle sales, including buses, trucks and cars declined significantly within the Indian market, as follows:

  • SUVs and cars: declined by -29% to 24,582 vehicles,
  • Trucks and buses: fell -30% to 75,165 vehicles.

Jaguar Land Rover

Wholesale and retail sales of Jaguar Land Rover jumped by 27.1% and 22% respectively compared to fiscal Q1 last year. Total sales for the quarter reached 115,596 units. Tata Motors purchased Jaguar Land Rover from the Ford Motor Company in 2008 for $2.3 billion.

Acquiring the British car marques at the peak of the global financial crisis was money well-spent for Tata.

Operating margins of Jaguar Land Rover increased from 15.8% last year to 20.3%, while in the Indian business they declined to (minus) -2.8% from +2.3%.

Tata Motors wrote in a press release:

“A continuing weak operating and economic environment in the standalone business was more than offset by strong demand for new products, growth in volumes, richer product mix and richer geographic mix at Jaguar Land Rover.”

Tata tarnished with ‘poor man’s car’ image

Tata Motors dominates the domestic trucks and buses market, but it has failed to tempt customers away from foreign competitors such as Honda and Hyundai and local rival Maruti Suzuki.

Indian customers still associate Tata cars with taxis and low-end cars, such as the ultra-cheap Nano hatchback.

Tata Zest

In a bid to regain market share and bolster domestic sales, Tata will launch a new car – the Tata Zest – on Tuesday.

Tim Leverton, Head of Advanced and Product Engineering at Tata Motors, said of the Zest:

“It is an important time for us at Tata Motors. We looked at design, handling, fuel economy and lots of other details like space, seating positions and road conditions. Customer feedback was an integral part of the exercise.”

Tata Zest

Will the new Tata Zest help bolster sales in the domestic market?

Murali Gopalan wrote in The Hindu that the Zest is “clearly a do-or-die product.” A great deal of work has gone into its design and engineering.

Tata Motors’ shares ended the day 3.3% up at 447.40 rupees. Tata is the 16th largest car company in the world.