MUMBAI: Tata Motors said profit fell in its latest financial quarter because deliveries at its Jaguar Land Rover luxury unit declined. Net income fell to 35.8 billion rupees ($580 million) in the quarter ended Dec. 31 from 48 billion rupees a year earlier, India’s biggest automaker said in a statement today.
Jaguar Land Rover profit after tax declined to 593 million pounds ($907 million) from 619 million pounds a year earlier. Revenue increased 10 percent to 5.9 billion pounds.
Deliveries at Jaguar Land Rover dropped 0.6 percent in the quarter after sales fell in North America.
“The key reasons for JLR’s slow sales in recent months have been supply driven and planned actions rather than any demand issues,” Ashvin Shetty and Ritu Modi, analysts at Ambit Capital, wrote in a Jan. 21 report.
Jaguar Land Rover’s new factory in China is expected to boost output and that, combined with the introduction of models, will likely drive growth, the analysts wrote.
The luxury unit has been propping up profits at its parent for the past few years, helped by strong sales growth in China. But cooling economic growth in China hurt JLR’s sales, which grew only 4 percent in the quarter in the country compared with 40 growth between April and September.
“We are still cautiously optimistic about China,” JLR CEO Ralf Speth told reporters. “We are opening new dealerships and are also optimistic about volume growth in China,” he said.
JLR expects to begin sales of its locally-produced Range Rover Evoque SUV in China in the quarter ending March 31.
Tata said it expects Jaguar Land Rover’s profitability to be lower in the coming year as it increases investments at the UK-based unit, which it bought from Ford Motor in 2008.
Tata plans to spend between 3.6 billion pounds ($5.51 billion) and 3.8 billion pounds ($5.8 billion) on capital expenditure at Jaguar Land Rover in the fiscal year starting April 1.
Tata’s quarterly earnings were hit by a prolonged slump in demand for cars and commercial vehicles in India,
