Tata Motors Affected by Slow Chinese Growth
Published By : 28 May 2015 | Published By : QYRESEARCH
With the Chinese economy facing a slowdown, the demand for luxury cars has hit the bottom. This has directly affected Tata Motors with its Jaguars registering poor sales figures. The Indian automotive firm’s shares dropped by 5% yesterday, after it released its reports for the fourth quarter in which the company’s net profit has reduced by 56%. Revenue-wise, Tata Motors has been largest car maker in India. For the first time since 2002, the car manufacturer held back dividends after releasing the quarterly revenue report.
In China, to counter the slow demand in the market, most of the auto manufacturers are slashing down the prices. Analysts mention that the trend is unlikely to change in the near future and Tata Motors need to follow the path. However, Ralf Speth, the CEO for JLR clearly stated that the company would not be among the first to cut down the prices.
China has been the biggest market for JLR. However, sales figures dropped to 20% in the last quarter of 2014-15. In the same quarter a year ago, the company’s sales had increased to 36%. With inventory piling up at the showrooms, analysts predict that the company needs to reduce its prices directly or offer discounts to the dealers. JLR had to cut prices on some of its models last year due to the anti-monopoly probe started by the Chinese government, but its cars are still expensive than those of Mercedes and Audi. The Chinese picture does not look rosy for Tata as it faces some problems at its production plant in China, established jointly with Cherry Automobile.