Despite hurdles, Tata sees robust demand for JLR in key markets
2 min read . Updated: 10 Nov 2022, 06:42 AM IST
PremiumTata Motors plans to complete the acquisition of Ford’s car factory in Sanand, Gujarat, by early next year and start production
NEW DELHI : Luxury carmaker Jaguar Land Rover (JLR) expects its already-large order book to swell further, despite economic headwinds and uncertainties in major markets such as Europe and China.
With no immediate stress on demand in sight, JLR is focusing on ramping up supplies to meet its 205,000-strong order book.
JLR’s September quarter sales rose 17.6% from a year earlier to 75,307 amid easing production constraints, parent Tata Motors Ltd said.
Tata Motors on Wednesday narrowed its consolidated second-quarter net loss to ₹945 crore from ₹4,441.57 crore a year earlier.
This is the seventh consecutive quarter in which the carmaker has failed to turn in a consolidated net profit. Consolidated net loss in the quarter ended 30 June was ₹5,006 crore.
Consolidated revenue rose 29.7% in the second quarter of the ongoing fiscal to ₹79,611 crore, and the Ebitda margin widened 130 basis points from a year earlier to 9.7%.
Tata Motors also said it has decided to delist its American Depository Shares (ADS) from the New York Stock Exchange since the objectives behind the listing are not relevant anymore.
The company will file for the delisting in January.
Shareholders will need to convert the ADS to underlying ordinary shares by July 2023, which will be tradeable on Indian stock exchanges.
Tata Motors said delisting ADS would simplify its financial reporting requirements and reduce the administrative burden with listings in multiple geographies.
Besides, participation has been consistently dropping in ADS, which now accounts for less than 5% of ordinary shares.
“The order book for JLR continues to remain strong and is growing, even though we have started to ramp up production of the Range Rover and Range Rover Sport. So, we see continued demand there, and at this point, we have enough and more orders to fulfil and don’t see the concern on demand", P.B. Balaji, group chief financial officer, said on a post-results conference call.
“However, global markets are volatile, and we will watch them cautiously. Our entire focus in the near term is on ramping up production," Balaji added.
Balaji, however, said there is some stress in the lower-end variants of the JLR portfolio, which is being addressed by an increase in marketing spending or customer discounts. In China, JLR continues to see good demand for its premium and luxury vehicles.
In India, Tata Motors plans to complete the acquisition of Ford’s car factory in Sanand, Gujarat, by early next year and start production quickly, Balaji said.
Domestic passenger vehicle wholesales grew 69% to 142,755 vehicles as the carmaker ramped up supply for the festive season. While some demand moderation is expected, Balaji said the domestic order book at 100,000 units is fully aligned with demand, and there are no concerns around inventory build-up. Discounting actions to aid liquidation ahead of the implementation of BS-VI phase-II from April next year are likely to take place, he said.
Balaji said the residual impact of commodity price inflation, too, has been addressed by a 0.9% price hike this month. “This will be the last of the price hike actions from us in the near term," Balaji said.
The commercial vehicle business of Tata Motors saw a 15% growth in sales. While domestic wholesales stood at 93,651 vehicles, a growth of 19% from a year earlier, exports fell 22% to 6,771 vehicles because of muted sentiment amid financial crisis in some export markets, the company said. “Domestic retails grew at a higher rate compared to wholesales, and margin improvement was aided by higher volumes and realizations, although impacted by residual commodity inflation and foreign exchange", Tata Motors said in a press release.
