Who would have thought six years ago, when Tata Motors bought the ailing Jaguar and Land Rover brands from Ford, that the British carmaker would be propping up its Indian parent?
Tata saw its automotive business slump into the red in the financial year to the end of March but JLR set new records with a 50% pre-tax profit rise to GBP2.5bn (US$4.2bn), spinning off a GBP150m (US$251m) dividend to its parent.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
The Times of London noted the GBP2.5bn pre-tax profit figure on a 22% rise in revenues in the year to GBP19.3bn (US$32.3bn) was not without significance: it is about twice the amount of money that Tata paid Ford for JLR in 2008 when the British company was losing money and one UK plant was in danger of being closed.
Tata’s problems have been at home where it makes cars and trucks mainly for a falling domestic market. The company posted a US$174m loss on revenues of US$5.6bn, blaming the state of the Indian economy.
The company said in a statement: “A sustained deceleration in economic growth, leading to weak consumer sentiments, high inflation, higher fuel prices, reduced availability of finance and an elevated interest rate regime, continues to impact the demand for the entire auto industry in general and commercial vehicles [specifically].”
Several global car companies have entered the Indian market in the past decade on the back of rapid growth in an emerging market with a growing, aspirational middle class. However, the economy has slowed along with industrial activity while interest rates have increased.
The Indian car market shrank 4.7% in the 2013/2014 financial year as only 1.8m units were sold. Tata is hoping for a boost in the domestic market following the launch of the Bolt hatchback and Zest compact sedan over the next few months.
Cyrus Mistry, chairman of the wider Tata conglomerate, took charge of the struggling motor group following the sudden death of chief executive Karl Slym earlier this year. The company has yet to reveal when a new chief executive will be appointed.
