Although sales for Tata Motors have increased by 4% this year, the company reported losses worth Rs 27,000 this quarter. According to their executives, a large reason behind the losses is the dismal sales in China, which is a huge market that is not ready to accept Jaguar Land Rover.
Chief executive Ralf Speth said, “Jaguar Land Rover reported strong third-quarter sales in the UK and North America, but our overall performance continued to be impacted by challenging market conditions in China.” Fortunately for Tata Motors, Speth also had a strong game plan in place to tackle the growing losses in the Chinese market.
He said that they have already set plans in motion in order to work more closely with their Chinese retailers and to incorporate a ‘Pull’ strategy regarding their vehicles. He said, further elaborating on their strategy, “Today, we are also announcing a non-cash exceptional charge to reduce the book value of our capitalized investments. This accounting adjustment is consistent with the other decisive actions that we must take as part of our ‘Charge’ and Accelerate transformation programmes to create an efficient and resilient business, enabling Jaguar Land Rover to counter the multiple economic, geopolitical, technological and regulatory headwinds presently impacting the automotive industry. We are taking the right decisions now to prepare the company for the new technologies and strong product offensive for the future.”
Speaking of new technologies, 90% of JLRs sales in Europe consist of diesel-powered vehicles which may turn out to be a problem for the company as increasing amounts of consumers are now looking to adopt electric or hybrid vehicles in order to conserve fuel and reduce their carbon footprints. This can spell a potential catastrophe for the company if they do not look into providing similar solutions themselves.
What about Tata Motor’s performance in India?
In India, Tata Motors has witnessed a growth of 1.5%, with its profits increased to a total of 16,200 Crore INR. However, having said that, their sales volume has declined by 0.5%. They sold 1, 71,354 units due to what they called a challenging domestic market. In this challenging market, their passenger vehicles sales increased by a total of 5%, but the M&HCV sales have gone down by a whopping 15%, which accounts for the total drop in sales.
Guenter Butschek, the CEO and MD of Tata Motors remarked “The fiscal year 2019 so far has been a challenging period for the industry. Despite the muted growth, Tata Motors has delivered strong results, registered an impressive profit growth this year on the back of exciting products, renewed brand positioning and aggressive cost reduction.”
After revealing their losses, the company saw a dip in their stock market performance. The company’s shares on Thursday closed at 2.63% and were announced after trading hours.
With a positive outlook shed on a year that cost them substantial losses, Tata Motors shows that it has strong leadership and does have the potential to rise due to strong plans set in place for both, the Chinese and Indian markets.