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Tata Motors’ net loss mounts – inflation, China’s lockdowns are to blame, company says

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  • The automaker continued to quadruple its consolidated net loss to ₹4,950 crore.
  • The company attributed the sharp increase in losses to inflation, Chinese lockdowns, chip shortages and volatile forex and commodity prices.
  • While Tata Motors subsidiary JLR continued to struggle, the company’s Indian operations continued to thrive with strong passenger car sales.

Auto wholesaler Tata Motors missed analyst estimates as the net loss widened five times to 4,950 crore, compared to a loss of ₹992 crore reported in the previous quarter.

Sales declined 8.3% to 71,934 crore during the June quarter, from 78,439 crore last quarter due to lower sales of its UK subsidiary Jaguar Land Rover.

Tata Motors attributed the sharp increase in losses to inflation, Chinese lockdowns, chip supply problems and volatile forex and commodity prices.

Tata Motors consolidated Q1 FY23 Q4 FY22 Q1 FY22
Gain -₹4.950 crore -₹992 crore -₹4.450 crore
Revenue ₹71,934 crore ₹78,439 crore ₹66,406 crore
Margin 7.4% 11.2% 8.3%

Source: Company Reports

India biz sees strong momentum – with passenger EVs buzzing fast
While Tata Motors subsidiary JLR continued to struggle, the company’s Indian operations continued to thrive with strong passenger and electric vehicle sales.

The Indian PV business remained strong with sales up 122% year-over-year, driven by strong demand. The automaker said its PV segment will continue to deliver strong performance, supporting profitability and cash flow improvement measures.

Meanwhile, the electric vehicle space at Tata Motors continues to perform well as the company sold 9,310 units in Q1 FY23, more than double what it sold in the entire FY21 (4,218).

Despite concerns about inflation and the geopolitical situation, Tata Motors says demand is strong and chip supply is expected to improve from the next quarter. In addition, a cooling of raw material prices after a strong increase will support margins.

sale

Period of time Q1 FY23 YoY change
Jaguar Land Rover 78.825 37%
Tata Commercial Vehicles 95,900 104.1%
Tata Passenger Vehicles 1,30.351 101.7%

Source: Company Reports

JLR’s woes continue to mount, but the outlook remains positive
Retail sales at JLR in the June quarter were 78,825 vehicles, sequentially broadly flat and down 37% year-over-year. Turnover fell by almost 8% year-on-year to £4.4 billion.

This was “affected by supply challenges, including semiconductor shortages, a slower-than-expected ramp-up of production for the new Range Rover and the new Range Rover Sport and the lockdowns in China,” the company said.

Thierry Bolloré, CEO of JLR, struck an optimistic note, but he only seems to have an answer to the chip shortage, not to the other problems that the Tata Motors subsidiary is staring at.

“While headwinds from global semiconductor supply and Covid lockdowns in China have impacted our business performance this quarter, I am pleased to confirm that we have a fully strengthened organization to respond to the semiconductor crisis,” he said.

On the positive side, the Tata Motors China joint venture achieved a positive operating margin in the June quarter despite the lockdown.

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