Tata Motors: Concerns overdone

Though September Jaguar Land Rover sales have disappointed, analysts are bullish on new launches in the coming months

Shares of Tata Motors fell in Monday’s trade as the company’s wholesale sales (what the company sells to dealers worldwide) for September came in at 26,461 against the market’s estimates of 27,000-28,000 units. If Evoque is excluded, sales would be down even more. Compared to last year, the company’s wholesale volumes are down 4.3%. While the wholesale volumes have disappointed, Tata Motors has put out numbers of retail sales (cars being sold at dealerships), which are higher at 22% at 36,907. This is the first time the company has disclosed retail sales numbers, which shows that retail demand remains robust. Also, the company would have removed excess inventory from the system.

 

And if one removes the sales of 9,410 units of Evoque from the 36,907 units sold in September, then the company’s retail sales have stayed flat year-on-year, explains Deepak Jain of Sharekhan. In September 2011, retail sales of JLR stood at 30,153 units, of which Evoque was at 3,049. Also Jaguar sales have declined 49%, compared to September of last year, while Land Rover is up 7%. This has come as a bother for investors as sales of luxury cars is not showing any sign of weakness globally. Both Mercedes and BMW have posted robust sales.

Despite the fall, the view does not seem negative for the company as it is slated to launch new models in the coming months as the company has deliberately released lesser number of Range Rover and XF models due to new model launches. In the coming months, the company’s planning to launch Jaguar Sports Brake, which will be the fastest Jaguar so far. This apart, the company has showcased several others like Jaguar F type and the new Defender, which will be seen in the new James Bond film. The reason for the decline in wholesale vehicles could well be the new launches. Kotak Institutional Equities expects strong growth in JLR volumes to continue driven by new product launches.