Tata Motors backlog of 300,000 orders to keep demand momentum going

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Tata Motors, India’s largest automaker by revenue, holds a record order book of 300,000 vehicles for the combined passenger vehicle (PV) businesses of Jaguar Land Rover and Tata Motors at the end of the third quarter ending in September. This translates into robust revenue of Rs 90,000 crore or $11 billion.

With the supply of semiconductors improving and its order book stable, Tata Motors is well positioned to record record sales in its photovoltaic business, even as its flagship brand Jaguar Land Rover takes the path of a sustained recovery with improved supplies. The PV business, which is running at full steam, achieved its highest ever quarterly revenue at Rs 12,500 crore in the July-September 2022 quarter, selling over 142,000 vehicles.

Following today’s second quarter earnings call, PB Balaji, group chief financial officer at Tata Motors, told the media that the order book is very strong for Jaguar Land Rover at 204,000 units and there is has a continued increase in demand for its three main models – the Land Rover Defender, Range Rover and Range Rover Sport.

“Although global markets are volatile, we are still seeing a recovery in the order book and we see no major concerns. For Tata Motors’ PV business, the order book is at 100,000 units. We will continue to grow above the market. The outlook remains positive, with improving supplies, we aim to generate positive free cash flow in fiscal 2023, added Balaji confidently.

Building on the strong performance in the second quarter, Tata Motors increased its market share by 200 basis points in the PV segment to 14.1% at the end of September 2022.

It was also a record quarter for the electric vehicle business, with 11,500 vehicles delivered.

Improved visibility of semiconductor supplies
“There is better visibility on semiconductor supplies. The number of issues at JLR has gone down and India has no major ramp-up issues due to supplies. The focus is on creating demand,” Balaji said.

For its part, JLR has engaged directly with chip suppliers by entering into partnership agreements to improve near-term supply visibility and support its future product programs.

Tata Motors’ photovoltaic business, as expected, is expected to end fiscal 2023 with over half a million units sold, while JLR is expected to end the fiscal year with volumes of 301,000 units.


Increase investment and increase capacity
Meanwhile, Tata Motors is set to invest 2.5 billion pounds (Rs 23,500 crore) for JLR in the current financial year and another Rs 6,000 crore for its standalone business – which includes at both PV and utility vehicles.

In order to meet higher demand, Tata Motors has completed the debottlenecking of its existing car factory capacities to produce around 650,000 units or 55,000 units per month.

Once the Ford India’s Sanand plant begins operation in FY2024Tata Motors will be able to generate an additional 25,000 units of capacity per month or 300,000 units per year, bringing its cumulative manufacturing capacity to over 850,000 units per year.

Given that there is usually a slowdown in bookings after the holiday season for the industry and discounts offered on certain models, the group’s financial director is not very worried. According to Balaji, this is a regular phenomenon and despite the discounts, there is no significant margin erosion. “While there are headwinds in the market, we don’t see any major concerns on the demand front,” Balaji said.

Additionally, with declining commodity prices and increasing operating leverage, the company expects to see improved earnings going forward.

Sharpen the retail focus on resumes
In its commercial vehicle business, Tata Motors has decided to share Vahan’s retail sales figures and market share. The move underscores the shift from a shipping-driven rebate market share to a value-driven, real-world retail market share.

According to company management, Tata Motors held a 43% market share in the second quarter of fiscal 2023. the company is not interested in participating in the discount war to buy market share and will continue to make efforts to reduce it further and focus on selling value.

Strong performance helps prune consolidated losses
Tata Motors’ strong performance meant that in the second quarter of September it significantly reduced its consolidated loss to Rs 944.61 crore, from the net loss of Rs 4,441.57 crore in the second quarter of the year. fiscal year 2022.

Strong volume growth in stand-alone entities for its passenger and commercial vehicle businesses helped the auto major post a 29.7% year-on-year growth in the second quarter of fiscal 2023 to Rs 79,611 crore .

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