India’s Tata Motors has cut prices, sales and production targets at its luxury Jaguar Land Rover (JLR) arm in China, a top executive said, as it struggles with high inventories in a slowing market.
Economic growth in China, the world’s biggest car market, has slowed to a 25 year low and a drop in consumer confidence is hurting sales of automakers from BMW to General Motors.
Tata Motors’ net profit for the April-June quarter fell 49% to Rs27.69bn ($434mn), compared with the same period a year ago. Analysts on average expected profit to be Rs34.59bn, according to Thomson Reuters data. Net sales fell 6% to Rs601.8bn.
“Production and sales targets (for JLR in China) have been adjusted to reflect the slowing market,” Tata Motors finance chief C Ramakrishnan said on Friday after the group posted a near halving of quarterly profit. He did not elaborate on the extent of cuts. Tata Motors has also cut the price of JLR’s locally-made Range Rover Evoque sport-utility vehicle (SUV) by up to 6%, and lowered the launch price of its Jaguar XE compact sedan, he said, but did not give price details.
The cut in price and targets for JLR comes weeks after automakers such as BMW, GM and Ford Motor Co announced price cuts on their Chinese models to combat weak sales growth.
China’s automakers association has cut its 2015 sales growth forecast to 3% from 7%.
JLR should see a return to sales growth from the December quarter driven by new launches and as management improves brand awareness for the China-made Evoque, said auto analyst Nitesh Sharma at brokerage Phillip Capital.