- Deliveries of the luxury unit in China declined 10 percent
- Luxury car demand waned in China as extravagance discouraged
Tata Motors Ltd.’s profit declined as earnings tumbled at its Jaguar Land Rover unit on weaker deliveries in China. The Indian automaker’s shares fell to their lowest level since August 2013.
Net income in the quarter through December dropped 2 percent to 35.1 billion rupees ($515 million), the Mumbai-based carmaker said on Thursday. Profit at the Jaguar Land Rover luxury unit, which offsets losses at Tata’s domestic car and truck operations, declined 26 percent to 440 million pounds ($636 million).
Jaguar Land Rover retail sales fell 10 percent in China, where luxury-car sales stagnated as economic growth slowed. Tata Motors’ luxury unit is looking to overcome that with the introduction of new affordable models such as the Jaguar XE and the Discovery Sport in the world’s biggest auto market.
“JLR cut prices in many markets, had higher new launch expenses and discounts in China may have eroded margins,” Basudeb Banerjee, an analyst at Antique Stock Broking in Mumbai, said before Tata Motors released its results.
Tata Motors fell 5.2 percent to 276.35 rupees in Mumbai. The benchmark S&P BSE Sensex declined 3.4 percent.
- Jaguar Land Rover revenue declined to 5.78 billion pounds
- Deliveries of the luxury unit rose 23 percent in the quarter
- Jaguar sales jumped 30 percent, while Land Rover rose 22 percent
Jaguar Land Rover Chief Executive Officer Ralf Speth reiterated on Thursday that the company sees opportunity to grow in China. Production of the Discovery Sport in China started in November. Sales of Jaguar Land Rover in China climbed in January for the first time in three months.
“We’re seeing the Chinese volumes coming back and the market stabilizing,” Speth said at a press conference in Mumbai. “We are cautiously optimistic about China.”
The automaker is increasing its network of outlets in China to 200 by the end of this year, he said.
Jaguar, long synonymous with sleek race cars and sedans, is joining the fastest-growing passenger car segment in spring this year with its first crossover the F-PACE, which will compete with Audi’s Q5 and BMW’s X3 models. The crossover is part of a Jaguar strategy to broaden out the brand that began with the mid-range XE sedan, its cheapest model and a competitor for the BMW 3-Series. The F-PACE will first be introduced in the U.K., Speth said.
Land Rover is benefiting from a clamor among drivers across the world for SUVs of all sizes. After it started sales of Discovery Sport last year, the company plans to unveil a convertible version of the Evoque this year.
Tata Motors, excluding subsidiaries, reported its loss narrowed to 2 billion rupees from 21.2 billion rupees a year earlier. Deliveries of its passenger cars and commercial vehicles declined 3.3 percent.
The company is looking to revamp its lineup of compact hatchbacks and sedans in India to compete with local units of Suzuki Motor Corp. and Hyundai Motor Co. At the recently concluded Delhi Auto Expo, Tata Motors displayed its new compact hatchback, a compact sedan, the Nexon compact SUV concept and a larger SUV called the Hexa.