Tata Motors Net Misses Estimates as Europe Demand Slows

Tata Motors Ltd. (TTMT), India’s biggest automaker, posted profit that missed analysts’ estimates as demand for luxury vehicles made by its Jaguar Land Rover Plc unit slowed in Europe.

Second-quarter net income rose 11 percent to 20.8 billion rupees ($384 million), from 18.8 billion rupees a year earlier, the Mumbai-based company said in a statement yesterday. That lagged behind the 24.3 billion-rupee median of 34 analysts’ estimates compiled by Bloomberg. Profit at Jaguar Land Rover rose 77 percent to 305 million pounds ($488 million).

Jaguar deliveries declined for four straight months through September, while sales that month at Land Rover expanded at the slowest pace since December 2009. This may increase the pressure on Jaguar Land Rover Chief Executive Officer Ralf Speth to revamp Jaguar’s aging designs and boost the appeal of Land Rover models other than the Evoque.

“In this market all the luxury carmakers are facing pressure,” said Mitul Shah, a Mumbai-based analyst with Karvy Stock Broking Ltd. who has a hold rating on the stock. “Going forward, we are not positive on the sales outlook for Jaguar Land Rover, particularly in Europe, China and the U.K.”

Tata Motors rose 0.9 percent to 269.35 rupees in Mumbai trading yesterday. The earnings announcement was made after the close of trading. The shares have climbed 51 percent this year, compared with a 22 percent increase in the 30-member benchmark BSE India Sensitive Index.

Sales Estimates

Net sales increased 19 percent to 428.2 billion rupees in the three months ended Sept. 30, according to the statement. That lagged behind the 442.1 billion-rupee median of 34 analysts’ estimates compiled by Bloomberg.

Total costs, including of materials, wages and product development, rose 20 percent to 396.6 billion rupees, according to the statement.

Tata Motors has said it plans to invest $12 billion in its British luxury-vehicle unit over five years.

Jaguar Land Rover, which showed its first two-seat sports car in almost four decades at the Paris Motor Show in September, is targeting as much as 20 percent share of the full-size sports car market, Steven de Ploey, the marketing head for Jaguar, said Sept. 27. The company will also begin deliveries next year of the new Range Rover SUV.

The unit’s deliveries increased 14 percent to 77,442 vehicles in the three months ended Sept. 30. Land Rover’s sales rose 24 percent to 67,610 SUVs as demand for the Evoque, introduced in September last year, surged.

Emerging Markets

Jaguar Land Rover is turning to emerging markets such as China, Russia and South Africa to pursue growth. The luxury unit received written approval from China’s main industry planner to form a venture with Chery Automobile Co. and begin making cars in the world’s biggest auto market, Speth said yesterday.

“We continue to see demand for our vehicles in China,” Speth said at a press conference in Mumbai. “So we remain cautiously optimistic that the growth will continue in future. Producing in China will give us additional opportunities.”

The venture, to be based in the eastern city of Changshu in Jiangsu province will have a production capacity of 130,000 vehicles annually, according to a statement posted on China’s Ministry of Environmental Protection’s website.

Land Rover will have 160 Chinese dealerships by 2020, John Edwards, who heads the car brand, said in September.

Jaguar Land Rover deliveries in September fell 4.3 percent, the first decline in sales in 14 months, as a slowing global economy sapped demand for luxury vehicles. Sales of Jaguar branded cars fell 49 percent to 2,808 units, the steepest monthly drop since Tata Motors started reporting data in December 2009. Land Rover SUV sales increased 7 percent.

To contact the reporter on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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