Parliament election to hurt car sales in India in H1 FY25: Tata Motors' CFO

  • The ongoing general election in India is expected to hurt demand for passenger vehicles, believes Tata Motors CFO.
Tata
The ongoing general election in India is expected to hurt demand for passenger vehicles, believes Tata Motors CFO.
Tata
The ongoing general election in India is expected to hurt demand for passenger vehicles, believes Tata Motors CFO.

Tata Motors, India's third-largest carmaker by sales, expects the passenger vehicle demand in India to weaken in the first half of FY25 owing to the parliamentary election that has been going on in the country, reported Reuters. Tata Motors' Chief Financial Officer P B Balaji has reportedly said that the automaker is waiting for elections to end to assess demand. He flagged the general election as a demand dampener for the passenger vehicles in the country.

The general election in India started in mid-April this year and will end in early June. Balaji's comment comes almost immediately after FADA forecasted earlier this week that the uncertainty around elections could hurt automakers' sales in May 2024. The report stated that passenger vehicle sales growth in India is expected to slow down to five per cent in the current financial year that started in April 2024 compared to last year's 8.4 per cent growth rate. However, Balaji hopes the Indian passenger vehicle market will see a better second half with decent sales growth.

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Luxury car sales to remain resilient

Tata Motors which owns the luxury British car marque Jaguar Land Rover (JLR) further revealed that overall sales for luxury vehicles would likely remain resilient in the current fiscal, which is a positive sign for JLR's cash flow. The Jaguar Land Rover currently contributes two-thirds of Tata Motors' consolidated revenue and has registered a turnaround in profitability after years of losses. The OEM is now focusing on luxury SUVs like Range Rover Sport and top-selling Defender in an attempt to boost its profit margin.

The report has revealed that Tata Motors expects JLR's earnings before interest and taxes (EBIT) margins in FY25 to be similar to the 8.5 per cent it clocked in the previous financial year. JLR is reportedly targeting an EBIT margin of over 10 per cent by the next financial year FY26.

First Published Date: 12 May 2024, 09:02 AM IST
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