Tata Motors' Net Loss Worsens; Co. Blames Inflation, Chinese Govt Restrictions

Tata Motors, a major auto manufacturer, fell short of analyst expectations as its net loss increased five times to 4,950 crore from the previous quarter's reported loss of 992 crore. Due to fewer sales from its British affiliate Jaguar Land Rover, its revenue fell 8.3 percent to 71,934 crore in the June quarter from 78,439 crore the previous quarter.

Tata Motors blamed inflation, Chinese government restrictions, problems with the chip supply, and fluctuating foreign exchange and commodities costs for the rapid rise in losses. India's economy is growing quickly, and EVs for passengers are booming. While JLR, a Tata Motors affiliate, continued to struggle, business in India for the corporation was booming because to strong sales of passenger and electric vehicles.

Due to high demand, its Indian PV business continued to perform well, with revenues increasing 122 percent year over year. The automaker predicted that its PV division will maintain its good performance, maintain profitability, and carry out cash flow optimization initiatives. Tata Motors continues to have success with its electric car division, selling 9,310 units in the first quarter of FY23, more than twice as many as it did in the entire FY21 (4,218).

Despite worries about the geopolitical environment and inflation, according to Tata Motors, demand is high and chip supply is anticipated to increase starting in the following quarter. Additionally, margins will be supported moving forward by a decline in commodity prices following a significant spike. JLR problems are still getting worse, but things are still looking up. JLR's retail sales of 78,825 automobiles in the June quarter were down 37 percent year over year and almost flat sequentially. At £4.4 billion, revenues were down roughly 8% from the prior year. According to company sources, this was "affected by supply issues, such as semiconductor shortages, slower than anticipated ramp-up of the New Range Rover and New Range Rover Sport manufacturing, and China lockdowns."

Thierry Bolloré, CEO of JLR, struck an upbeat tone, but it appears that he only has a solution for the chip shortage and not for the other problems that the Tata Motors affiliate is facing. I'm happy to inform that we have a fully reinforced organisation set up to deal to the semiconductor crisis, despite the fact that headwinds from the global semiconductor supply and Covid lockdowns in China have negatively impacted our commercial performance this quarter. Despite the lockup, Tata Motors China joint venture had a positive operating margin in the June quarter.