Tata Motors Ltd., India’s largest automaker, reported its biggest drop in vehicle sales in four years in January as high borrowing costs and a slowing economy reduced demand for the company’s trucks and cars.
Deliveries plunged 30 percent to 61,660 units last month, according to a statement on the company’s website. Passenger vehicle sales dropped 59 percent to 15,209 units in the month. Tata Motors didn’t disclose year-ago data the statement.
The automaker, which last month said its Jaguar Land Rover Plc unit’s margins may have declined in the quarter ended Dec. 31, failed to lure buyers at home amid the highest interest rate among Asia’s largest emerging markets. Rising prices of fuel to run its trucks, Safari and Sumo SUVs may have also deterred customers.
“Things are not going well for the industry as a whole,” said Basudeb Banerjee, an analyst with Quant Broking Pvt. in Mumbai. “Demand is in a very poor shape and will remain so in the Indian market even in the next financial year.”
Tata Motors shares fell 5.5 percent to 281.65 rupees in Mumbai before the company released its sales data.
India last month allowed state oil companies to raise diesel prices, stepping up efforts to curb fuel subsidies and tackle its budget gap. The Reserve Bank of India reduced the repurchase rate on Jan. 29 to 7.75 percent from 8 percent for the first time since April to revive growth as inflation cools and the government curbs the budget deficit.
“The market is very tight,” said Tata Motors spokesman Debasis Ray. “The commercial vehicle market is reflecting the slowness in the economy while on the passenger vehicles, the consumer sentiment is very low.”
Tata Motors derived 75 percent of its operating income from Jaguar Land Rover in the last financial year. JLR’s margins in the three months through December may have declined due to the pound weakening against other currencies and higher sales of its cheaper models, the Gaydon, England-based division said Jan. 23 in a U.S. filing.