Tata Motors cautiously optimistic about JLR

Volumes seen rising as FY13 will be first full year for Evoque and launch of Jaguar XF with a smaller engine

Tata Motors management remains cautiously optimistic on JLR’s prospects over the next 6-12 months. In a conference organized by Citi Global Markets the company’s management said that better operating leverage, product mix, regional mix and cost efficiencies will be the key drivers.

JLR volumes are expected to rise on account of FY13 being the first full year for Evoque and the launch of Jaguar XF with a smaller engine. Further, production of Freelander is expected to increase which were constrained to accommodate Evoque’s production.

Realisation, which had taken a hit in the March 2012 quarter, would going forward be a reflection of model mix, regional mix and new variant launches instead of direct price hikes, said the company’s management.

On China the management said that it will not be affected by policy changes, demand slowdown as it has a small base and more than 90% of its sales are Range Rover/Land Rover. Its joint venture with Chery is expected to take around two years before production commences.

Tata Motors however, said that in case of a demand uptick it will be constrained by engine supplies, which explains its move of setting up its own engine plant.

On domestic markets the company said that it faces headwinds on account of adverse macro and policy related issues like a mining ban in south India. Negative consumer sentiment and fear of a diesel price hike is hampering passenger car sales.

However, lower interest rate scenario can change the environment said the company’s management.