Tata Motors (India) Ltd.: Quarterly Sales Progress

In my earlier reports on Sales Updates of Tata Motors (India) business, I have been sharing the progress the company has been making on a Trailing-Twelve-Months basis. In this report I will be sharing the Segment-wise Quarterly Numbers of the company.

Here are the links to the earlier reports:
7th Dec'17: Tata Motors Ltd. - Gaining it's momentum back!!

6th Jan'18: Tata Motors Ltd. - December'17 Sales update.

6th Apr'18: Tata Motors (India) Sales Update: Post March'18

As we all know, the entire Automotive Industry in India suffered a setback around the end of March'17 when the SC declared that BS-III vehicles cannot be sold in the country from 1st April'2017. Not all vehicle manufacturers were ready with BS-IV compliant engines for their entire model range. The Commercial Vehicles division of Tata Motors was amongst the worst sufferers due to this event. The sales figures collapsed nearly 50% for Tata Motors CVs in April'17 and then started ramping up over the next few months. Still Tata Motors had reported a 33% drop in sales of M&HCVs during Q1-FY'18. The drop was less than 7% for LCVs, whereas the Cars & UVs segment had reported a modest growth of about 9% in Q1-FY'18.

Tata Motors had done a stellar recovery in sales from all three segments over the following 3 quarters of FY'18. With the company continuing to grow with good momentum during the initial months of FY'19, the Y-o-Y sales growth has been just spectacular. Have a look at the following table:

	Q1			Q2			Q3			Q4
	M&H CVs	LCVs	Cars & UVs	M&H CVs	LCVs	Cars & UVs	M&H CVs	LCVs	Cars & UVs	M&H CVs	LCVs	Cars & UVs
FY'2016-17	40788	50656	32285	39345	52835	42689	40995	50698	40964	54134	55578	41358
FY'2017-18	27149	47371	35171	44780	61469	47072	54980	68111	48417	63458	82121	58959
% Change Y-o-Y	-33.4	-6.5	8.9	13.8	16.3	10.3	34.1	34.3	18.2	17.2	47.8	42.6
FY'2018-19	53292	69923	53319
% Change Y-o-Y	96.3	47.6	51.6

In the M&HCVs segment, Tata Motors has posted a stupendous growth of 96% in Q1-FY'19 compared to Q1-FY'18. Part of this growth figure is due to the abnormally low figures of Q1 in last fiscal. But still the figures for Q1 of this fiscal are higher by about 30% when compared to Q1 of FY'17 too. Hence the sales of M&HCVs have been really good for Tata Motors, thanks to the new models launched by the company in the previous fiscal and the strong growth in Infrastructure sector of the country. Coming to LCVs, the segment recorded a growth of over 47%, selling almost 70,000 units during the quarter. This is inline with the strong sales recorded during the previous 3 quarters, with continued strong response to the new upgraded models launched by the company over the previous couple of quarters and strong growth in e-Commerce segment alongwith development of the hub-and-spoke model in various regions.

The Cars & UVs segment too has done extremely well, riding primarily on the success of the Tiago and the Nexon models, supported to some extent by the Tigor and the Hexa. Tata Motors has completely phased out the Nano, Indica & Indigo eCS models. Even the sales of Zest & Bolt are on the decline. The company is focusing on producing more of the new generation models and is now readying to upgrade it's Showrooms & Sales experience before the introduction of it's first model on the latest Modular platform. Just this week, Tata Motors has announced the name of the new SUV to be based on this new platform, which has been developed in association with Land Rover, as the Tata Harrier. During Q1-FY'19, Tata Motors reported a growth of over 51% in sales of Cars & UVs.

Over the next few quarters, I am expecting the growth rates for Tata Motors to taper down to around 20% levels as it will face high-base effect of strong numbers during Q2-Q4 of last fiscal. Even this growth will be considered to be healthy and will help the company improve it's profitability significantly during the current fiscal.

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.