Tata Motors Shows Big Jump in Second Quarter Profit

By Brendan Moore

10.27.2009

Tata logoA very tough 2008 and equally bad first part of 2009 has given way to profits again at India’s Tata Motors. Tata beat analysts’ forecasts as their profits more than doubled in the second quarter.

Tata posted the excellent numbers as a result of increased demand, higher margins owing to a decrease in costs and lower foreign exchange costs. Tata stated that its margins had jumped to 13.4%, a huge spike of 580 basis points from same time last year.

A company executive stated, “Volume recovery combined with improved realizations contributed to growth in revenues while stable material prices and accelerated cost reduction efforts continued to yield beneficial impact on margins.”

Tata produces an Indian lineup of lower-range passenger cars, the Nano, the world’s cheapest car, the Jaguar and Land Rover lines in the U.K, and a full range of trucks and busses for the Indian commercial market.

The profit figures do not include results from Jaguar Land Rover (JLR), which are resported separately.

As good as Tata’s performance is, it actually lags behind its main rivals, Maruti Suzuki and Hyundai India, in terms of car sales. However, Tata has just launched a new version of their Indica model that it has high hopes for in the future, and, Nano sales are expected to keep rising as production increases in order to match pent-up demand.

2009 Tata Nano

All the Indian automakers’ results were buoyed by sales in the all-important Indian festive season just passed, considered by most Indians to be a particularly auspicious time to make a major purchase.

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Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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2 Comments

  1. Can Tata really be making money on the Nano so soon?

  2. Watch out Japan, Korea and China–here come the Indians! I gotta say it again, that Nano is a cute little devil.

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