Tata Motors misses analyst estimates for its Q2 profits amid weaknesses in both its luxury brand Jaguar Land Rover and domestic sales. The carmaker ex
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Tata Motors recently reported a sudden drop in Q2 FY25 profits and its first revenue drop in 10 quarters. This comes amid weaknesses in its luxury brand, Jaguar Land Rover, and domestic sales. Net income for the quarter ending on September 30 dropped by 11 per cent to 3,340 crores compared to the same period last year, as stated in an exchange filing on Friday.
The average analyst projection expected a profit of 4,396 crores. The company’s underwhelming performance comes amid a broader decline in Indian consumption, with high inflation and slowing growth evident in various sectors. Last week, Maruti Suzuki India Ltd., the largest carmaker in the country, also reported a sales decline for its entry-level vehicles after its quarterly earnings fell short of expectations.
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Tata Motors’ domestic carmaking business saw a four per cent revenue drop due to low demand, while the commercial vehicle sector reported a 14 per cent revenue decline.
Jaguar Land Rover’s global luxury car sales dropped three per cent compared to last year, according to a separate filing made last month. This decline was attributed to aluminum supply disruptions affecting production. However, the company expects production and wholesale volumes to recover strongly in the next two quarters.
Positive festive period outlook:
While Tata Motors remains cautious about near-term domestic demand, the carmaker expects to drive up sales during the third quarter with the help of the festive season and significant infrastructural investments. The festive season in India is considered a golden period for carmakers, with a positive atmosphere leading to increased consumer spending. Moreover, Indian families consider the festive period to be auspicious for making big purchases, and as such, buying cars in this period is seen as a symbol of good fortune.
To this extent, a statement made on Friday said they expect “all-round improvement in performance in H2 FY25 and the business to become net debt free by this year.”
Also Read : SUVs push car sales in India by 32 percent in October, yet unsold car stocks rise
Shailesh Chandra, the managing director of Tata Motors’ passenger vehicle division said in the statement, “Q3 has started off with a resurgence in industry demand on the back of a robust festive season.” The carmaker recorded its highest-ever monthly registrations, which Aided in bringing down inventory to normal levels, he added.
The carmaker introduced the Curvv coupe-SUV in August and threw in a CNG variant of its top-selling vehicle, the Nexon, in September. These recently launched models are anticipated to boost sales in the upcoming months.
Suggested watch: Tata Curvv EV review
Wedding season to boost demand:
Passenger vehicle retail sales in October 2024 reflected a year-on-year growth of 32 per cent, as reported by the Federation of Automobile Dealers Associations (FADA).
The convergence of major Indian festivals such as Navratri and Diwali led to a boost in consumer demand, heightened by attractive offers and new launches. FADA expects this demand to grow even further with the upcoming wedding season in November and December. The wedding season is a source of strong demand for both two-wheelers and four-wheelers, and nearly 4.8 million weddings are expected across India this time.
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First Published Date: 09 Nov 2024, 12:13 PM IST
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