Tata Motors: Jaguar-Land Rover (JLR) progress for FY'2018

FY'2017 was a stupendous year for Jaguar-Land Rover (JLR), the luxury automobile brands owned by Tata Motors. JLR had managed to post strong double-digit growth in it's sales figures on the back of strong sales in US, China and other emerging markets, despite zero growth in it's primary markets of UK & Europe. It was always going to be a challenge to post healthy growth again in the following year, i.e. FY'2018. But the numbers posted by JLR are fairly encouraging. JLR witnessed over 9% decline in sales in UK & Europe during FY'2018, on the back of lower demand for Diesel vehicles and the UK-Brexit issue. The contribution of UK & Europe in JLR's total sales dropped from 44% in FY'17 to 39% in FY'18, thanks to decent growth posted in other geographies.

JLR reported nearly 20% growth in China during FY'2018 and this region has now become the largest market for the company with nearly 25% contribution to overall sales. US is now the 3rd largest market for JLR contributing about 21% to overall sales, on the back of 5% growth during FY'2018. The recently announced Jaguar I-Pace Luxury Electric Vehicle is expected to garner strong numbers from the US region. It's sales are expected to begin before the end of the current quarter. JLR posted a 3% growth in sales across other Emerging markets and it now contributes just over 15% to the company's global sales.

JLR's Trailing-Twelve-Months Sales performance

Overall for the year JLR managed to post 5.4% growth in it's Wholesales during FY'18 to cross the 633,000 units mark, compared to little over 600,000 units done in FY'17. Between the two luxury brands, Jaguar reported 1.4% decline in sales, whereas Land Rover managed to post 8.4% growth in sales. Hopefully Jaguar's decline will get reversed with the launch of the I-Pace model across different geographies. This particular model has got good reviews from various Auto experts and has also got an order for 20,000 units from Google's Autonomous Car division, Waymo, which is expected to be executed over a 2 years period. (Click here for full report).

JLR has also announced that they will be launching Electric versions of all their popular models over the next 2-3 years. Going by the reviews received by their first Electric model, it could mean exciting times ahead for JLR. The only pain point for JLR will be it's home markets of UK & Europe. Hopefully the sales decline in these markets will slow down soon and we could see reversal into positive growth during the second half of current fiscal.

For a few years till FY'2017, JLR was the main growth engine for Tata Motors, while it's India business was struggling to grow or even hold on to volumes & market shares. During FY'2018, the roles have got more balanced. JLR's growth has slowed down to mid-single digit, while Tata Motors' India business has posted strong double-digit growth in volumes, across segments. Between FY'17 and FY'18, JLR's numbers grew from 600,000 units to 633,000 units, whereas Tata Motors India business volumes jumped from 542,000 units to 639,000 units. The latter has posted a growth of almost 18% compared to just over 5% growth posted by the former. Going by the momentum generated over the last few months, Tata Motors' India business is expected to grow at 10% to 15% again in FY'2019. What this means is that, even if JLR continues to post about 5% growth in sales for FY'2019, the overall growth for Tata Motors topline will be decent, whereas the bottomline should fare better thanks to better economies of scale.

Tata Motors (India) Sales Update: Post March'18

Back in December'17, I had reported about Tata Motors gaining it's Momentum back, based on the Sales numbers till November'17. That was just the beginning of the company's Sales recovery & strengthening of market share across segments. The last 5 months have been nothing short of stellar for the company. No doubt that the entire Industry is growing at a healthy pace, but Tata Motors is growing faster than competition in most segments, which is helping it gain back the market share it had lost in the previous couple of years.

March'18 has proved to be the best month for Tata Motors in terms of Sales, both in Passenger Vehicles as well as Commercial Vehicles, in a long long time. Tata Motors (India) Wholesales stood at 69,440 units in the Domestic market, a 35% Y-o-Y growth, and 6713 units for Export, a growth of 15% Y-o-Y. For the month of March'18, the M&HCV segment reported a growth of 20%, the LCV segment posted 48% growth, the UV segment grew 223% and only the Car segment posted a de-growth of 5%. The M&HCV number of 24,321 units and the LCV segment's number of 31,296, are probably the highest the company has ever recorded in it's long history. The Tata Nexon & Tata Hexa powered the company's UV numbers to 7,908 units, again a highest ever figure. It's only the Car segment numbers for Tata Motors, which have seen better days when the Indica & Indigo CS models were in their prime.

Tata Motors (India) ended the year FY'18 with M&HCV numbers of 190,367 units, a growth of almost 9%. Remember that this growth has been achieved despite a terrible Q1 for the company, when the SC ruling disallowed sales of BS-III vehicles across India from April'17. Tata Motors had reported 33% drop in M&HCV sales during that Quarter. This was followed by a small jerk due to GST implementation in July'17. Tata Motors' LCV sales have certainly done much better than expected. The FY'18 number has climbed to 259,072 units, a growth of over 23% Y-o-Y. This growth is mainly because of the success of new products launched about 6 months ago. Before that the company was losing market share to aggressive competition from M&M, Ashok Leyland and others. With the success of the new products in both M&HCV and LCV segments, Tata Motors has not just arrested the fall in market share, it is also clawing back some share gradually.

At the start of FY'18, Tata Motors took a conscious decision to stop pushing sales of it's older car models like the Indica, Indigo eCS and the Nano, and let them die. Together these models were generating nearly 5,000 units on a monthly basis. The chart alongside clearly shows that Tata Motors has managed to limit volume losses in the Car segment, due to the stoppage of the above models, to a very small percentage. The company managed to increase production of it's Tiago and Tigor models to around 10,000 to 11,000 units every month. But the bigger story for Tata Motors' Passenger Vehicles business is the super success of the Tata Nexon. This model is single-handedly brought a lot of excitement in the Tata Motors showrooms and also on the sales charts. The rising blue bars in the neighbouring chart is giving enough evidence of the same. The Cars + UVs business did volumes of about 1,57,300 units in FY'17. The same has now jumped to about 1,89,700 units in FY'18, a growth of about 20%. This growth has helped Tata Motors grab the No.4 position in the Indian passenger car business, jumping over Toyoto and Honda in the last 12 months. After taming the 2 Japanese giants, Tata Motors is now aiming for the No.3 spot, which is currently held by another Indian UV giant Mahindra & Mahindra. For doing so, Tata Motors might need more than just the numbers from the Nexon and the Tiago. Can Tata Motors launch another strong model in FY'19, to help it climb the ladder further? Let's wait & watch.