Informist, Friday, Aug. 8, 2025

By Anand JC and Pallavi Singhal

NEW DELHI – Automobile behemoth Tata Motors Ltd. does not expect the production plans for its domestic passenger vehicle business and the UK-based Jaguar Land Rover operations to be hit by the shortage of rare earth magnets in the ongoing September quarter, its Chief Financial Officer P.B. Balaji told reporters in a post-earnings media call Friday.

"We are not seeing an impact for the current quarter coming up, and there are a lot of de-risking plans that we are putting in place to ensure that even in the medium term, we are all right," Balaji said. Measures taken to mitigate the impact of the shortage of the key input material include redesigning components, and procuring from different sources, the executive said.

The Safari maker disclosed its June quarter earnings after markets closed Friday. It reported a consolidated net profit of INR 39.2 billion on revenue of INR 1.044 trillion. Balaji said Tata Motors' performance in the quarter was impacted by decline in sales and a sharp drop in the profitability of JLR, which accounts for over 70% of its top line.

The earnings before interest, tax, depreciation, and amortisation of the JLR business fell 650 basis points to 9.3% due to the introduction of US tariffs on the import of automobiles into the country. Specifically, the company had to cough up 250 million pound sterling, or INR 29.4 billion. The US-UK trade deal was ratified only on Jun. 30 without a retrospective effect. This meant JLR was charged 27.5% as tariff. The JLR business also faced challenges in China due to the luxury tax of 10% charged there.

"The key thing that hit us in Q4 was the full 27.5% tariff in the entire quarter; we did not ship to the US for almost a month," Balaji said. The tariff situation is expected to ease for JLR in the coming quarters due to the US-UK trade deal. Given the recent development in China on the luxury tax, the company is rejigging plans to mitigate the impact. The company will take measures such as cost reduction to boost its profitability in the subsequent quarters on a sequential basis.

On its passenger vehicle business, the company said in addition to external challenges, Tata Motors also faced internal challenges. "Yes, there are external challenges, but we could have done a better job ourselves. So I'll be the first one to admit that," Balaji said. The company is focused on maintaining tight inventory across its entire chain, including at the dealership level, and pushing out a strong product line-up.

"Already, inventories have started correcting for us in the dealer network. July itself, we have corrected (inventory levels)," Balaji said. The company said high discounts are being provided on automobiles in the market right now, and Tata Motors is reducing inventory at dealerships to ensure they don't come under pressure. "We intend to dramatically drop inventory levels at the dealer level, so that the profitability of the dealer steps up, and there's no pressure to discount whatever vehicles are there," Balaji said.

The company is not looking at wholesale market shares now. "...ensuring sensible stock norms which keep dealers fully interested, and not panic in terms of discounting is how we want to play this game," he said.

Tata Motors saw a "significant" shift happening in the electric vehicle space. "...the introduction of the lifetime battery warranty for Curve.EV and Nexon.EV at another 45 kWh battery, led to the highest ever EV sales of 7,000 units in July," he said.

Tata Motors expects the global demand situation to remain challenging while domestic demand is likely to improve gradually ahead of the festival season. "Through the festive season and beyond, one should expect to see robust performance coming in (for the passenger vehicle segment)," Balaji said.

On the recent furore on social media over ethanol-blended petrol affecting the performance of cars, Balaji said that the new vehicles are designed to handle 20% ethanol in petrol currently. Technical challenges such as corrosion due to the usage of blended fuel have been fixed by redesigning the cars. "...these are planned interventions, so no stress from that perspective," Balaji said.

On Friday, shares of Tata Motors closed 2% lower on the National Stock Exchange at INR 633.70. End

Edited by Avishek Dutta

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