Tata Motors sees sales picking up of heavy commercial vehicle

Tata Motors, the country’s largest commercial vehicle manufacturer, is seeing improvement in its medium and heavy commercial vehicle (M&HCV) segment and expects sales to pick up in the second half of current fiscal, the company officials indicated at its result conference held Monday.

“M&HCV is showing improvement, though on a low base and is expected to pick up progressively in H2 FY 15,” the company said.

M&HCV sales of both Tata Motors and Mahindra and Mahindra have been improving every month since April. “We are passing through dynamic and uncertain time, but if i just go through four, five past months, every month has been better than previous months,” Ravindra Pisharody, executive director, commercial vehicle, Tata Motors, told reporters.

The Tata Group company is already seeing positive signs in its M&HCV segment, with April-June period emerging as the first in past nine quarters that saw improvement. Sustained recovery in M&HCV would also point at the recovery in manufacturing and various sections of economy coming back to growth, Pisharody added.

Tata Motors’ consolidated net profit in April-June jumped more than three fold far exceeding market expectations on strong sales of Jaguar and Land Rover (JLR) vehicles. The consolidated net profit in first quarter rose to Rs 5,358 crore from Rs 1,726 crore in a year ago quarter.

Tata Motors

JLR retail sales in the April-June quarter rose 22% to 115,596 units from a year ago, while sales of its domestic trucks, buses and passenger vehicles declined by 28% to 110,612 units. Operating margins at its JLR business rose to 20.3% from 15.8% a year ago, while margins at its Indian business fell to minus 2.8% from 2.3%. Its consolidated revenue rose to Rs 64,683 crore from Rs 46,796 crore from year ago.

“We had unbelievable product and market mix for JLR during the quarter, new product launches also helped,” said Ralf Speth, CEO of JLR.

Sharing the way forward for JLR, Speth said that the company is preparing for the launch of new Discovery Sport, Jaguar XE, Ingenium family of 2l engines in new engine plant and new China JV manufacturing plant. The Indian carmaker, which bought the British carmaker in 2008, continued to see strong operational cash flow due to higher margins.

The company plans to spend investment of around £3.5-3.7 billion in FY15 for this business.

Tata Motors also expects some headwinds to its overall margins going forward. Speth said that there could be impact of the current Russia and Ukraine crisis, and Europe too may see some issue as pound gets stronger. He is however confident that despite price cuts in China that the company had to take it will remain as a biggest market. The company will continue to invest heavily in China.

While Tata dominates the trucks and buses segment in India, its passenger cars have failed to lure customers away from local rival Maruti Suzuki and foreign competitors includingHyundai Motor Co and Honda Motor Co.

Tata will launch a new car ‘Zest’ in India today, its first new offering in four years, in a bid to regain market share and plug losses in its domestic business, which has also been hit by an economy that is battling its longest spell of below 5% growth in a quarter of a century.