Indian automaker Tata Motors’ posted a 63% slump in first quarter profit on Friday, as U.S. tariffs hurt its business that was already reeling from weak sales at home and in its luxury car businesses.
Tata Motors, India’s top seller of electric and commercial vehicles, is battling weak urban demand at home while its profit-driving luxury unit Jaguar Land Rover logged a sales drop of 11% overseas, hit by a temporary halt in U.S. exports and the phase-out of older Jaguar models.
Fresh U.S. import tariffs have further squeezed margins, piling pressure on the business.
Quarterly volumes and revenue took a hit from a 27.5% U.S. tariff on UK- and EU-made cars, along with the planned phase-out of legacy Jaguar models ahead of a new launch, Tata Motors said on Friday, adding that the tariffs dealt a direct blow to profitability and cash flow.
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The Jaguar Land Rover-owner reported a profit of 39.24 billion rupees ($447.8 million), down from a restated 105.14 billion rupees a year earlier, which includes a 49.75-billion-rupee one-time gain from the sale of its financing arm to non-bank lender Tata Capital.
Tata Motors kept its JLR guidance unchanged, saying a U.S.-UK trade deal signed in May will sharply cut the tariff hit. The pact lets the UK export 100,000 cars a year to the U.S. at a 10% duty, instead of the 25% faced by other countries.
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