Tata Motors Revenue Declines Amid Supply Constraints, Strong Demand for EV Models In Q2 FY25

Tata Motors reported a consolidated revenue of ₹101,450 crore in Q2 FY25, reflecting a 3.5 per cent decrease year-over-year as the company faced supply chain challenges and a temporary slowdown in demand for specific segments. The earnings report revealed that each of the company’s major segments, including Jaguar Land Rover (JLR), Tata Commercial Vehicles (CV), and Tata Passenger Vehicles (PV), saw reduced revenues compared to the same period in the previous fiscal year. The company's consolidated EBITDA margin was 11.4 per cent, down by 230 basis points (bps) year-over-year, with an earnings before interest and taxes (EBIT) margin of 5.6 per cent, down by 190 bps. Profit before tax (PBT) before exceptional items (bei) came in at ₹5,768 crore, a decrease of ₹391 crore from the prior-year period. Free cash flows for the automotive division were negative at ₹2,900 crore, largely due to lower production volumes linked to supply constraints. 

Jaguar Land Rover, the luxury vehicle division of Tata Motors, reported Q2 FY25 revenue of £6.5 billion, a 5.6 per cent year-over-year decline attributed to temporary aluminium supply constraints and quality control holds on select vehicles. EBITDA for JLR was 11.7 per cent, a drop of 320 bps from the previous year, and EBIT stood at 5.1 per cent, a decline of 220 bps. Despite these challenges, JLR achieved its eighth consecutive profitable quarter, with a PBT (bei) of £398 million.

JLR’s liquidity remained robust, with a cash balance of £3.4 billion and total liquidity of £4.9 billion, which includes an undrawn £1.6 billion credit facility. The division’s mid-to-long-term outlook is optimistic, supported by high consumer interest in its electric Range Rover, with 48,000 potential customers on a waitlist. The company’s EV production capabilities were bolstered by over £250 million invested in EV facilities at Halewood.

JLR expects production and wholesale volumes to recover as aluminium supplies stabilise in the second half of FY25. Full-year guidance for revenue remains unchanged at approximately £30 billion, with a target EBIT margin of 8.5 per cent and a net cash position.

Tata Motors’ commercial vehicle segment saw revenue fall to ₹17,288 crore, marking a 13.9 per cent decline year-over-year. The segment reported an EBITDA margin of 10.8 per cent up by 40 bps, supported by cost savings in commodity prices. PBT (bei) for the CV division was ₹1,314 crore, a decline of ₹212 crore. Sales volumes for the CV business declined by 19.6 per cent to 79,800 units as demand softened due to decreased infrastructure project execution, slower mining activity, and fleet utilisation affected by heavy rains. Export volumes also declined, falling by 11.1 per cent year-over-year to 4,400 units. 

Despite these factors, Tata CV maintained a domestic Vahan market share of 38.1 per cent in H1 FY25, with notable performance in heavy and medium commercial vehicles. Tata also made strides in EV buses, registering over 550 electric buses during the quarter, contributing to a cumulative 3,300 registered EV buses.

With the festive season and infrastructure spending expected to stimulate demand in the coming quarters, Tata Motors is optimistic that H2 FY25 will see a recovery in sales. Commodity prices are anticipated to remain stable, further supporting margin improvement.

The passenger vehicle segment’s Q2 FY25 revenue was ₹11,700 crore, down 3.9 per cent from Q2 FY24, while the EBITDA margin declined by 30 bps to 6.2 per cent. The EBIT margin for PV was 0.1 per cent, a reduction of 170 bps from the previous year. The decline in profitability is attributed to weaker consumer demand and seasonal factors impacting vehicle sales. 

Tata Motors strengthened its EV offerings in the passenger segment, holding a market-leading 65 per cent share in India’s EV market and a 67 per cent share in the EV personal segment. New model launches, such as the Curvv.ev and Nexon iCNG, have generated strong bookings, though actual deliveries were limited in Q2. 

The festive season in Q3 has already boosted industry demand, and Tata Motors has ramped up inventory reduction to align with the anticipated year-end demand surge. Tata’s multi-powertrain strategy, which includes EVs, ICE, and CNG vehicles, remains a key component of its growth plan in an increasingly competitive market.

The company reported a reduction in finance costs by ₹618 crore due to lower gross debt, improving overall profitability. Net profit contributions from joint ventures and associates reached ₹82 crore, up from ₹49 crore in Q2 FY24.