Tata Motors PV Expects Commodity Pressure To Persist In Q2, To Prioritise Cost-Cutting Measures

Tata Motors Passenger Vehicles expects commodity pressure to hit not just the company but also the auto industry in the September quarter, after a sharp decline in net profit in Q1 FY27.

The company said on Thursday it needs to "aggressively accelerate" its cost-reduction efforts and enhancing profitability will continue to be one of the automaker’s central priorities.

This came as TMPV profit nosedived 78.54% to ₹859 crore in the June quarter from ₹4,003 crore in the corresponding quarter of the preceding fiscal amid supply chain headwinds and persistent commodity pressure.

Total revenue from operations for the reporting quarter, however, rose 9% year-on-year to ₹95,799 crore from ₹87,677 crore in the first quarter of FY26.

During the quarter under review, JLR wholesales dropped 9.2% year-on-year on account of temporary supply constraints, including a fire at a key component supplier, the West Asia conflict and planned Jaguar wind-down, the company said.

In addition to the impact of reduced volumes, JLR's YoY profitability was impacted as VMEs continued to remain elevated, partially offset by favourable structural costs.

The domestic business delivered a strong revenue growth of 65% YoY. However, elevated commodities and Forex moderated improvement in margins, it said.

“Commodity pressure, again, (in) quarter two is going to hit us badly. Not only us, but the industry will also get hit with additional increases beyond the 4.5% that was seen in the first quarter. So, H1 is going to be significantly bad as far as commodity prices are concerned," said Shailesh Chandra, Managing Director & CEO, Tata Motors Passenger Vehicles Limited.

Commodity inflation impacted the company's June quarter domestic margins by nearly 4.5% of revenue while battery cell costs also rose 10% sequentially, putting additional pressure on EV margins.

Of course, he said, in the car industry, a company does not immediately pass on these increases, as first there is always an attempt to do aggressive cost reduction.

He added that even if you have to go for price increases, this would be more gradual and calibrated.

“And that is the approach we are going to follow. So, we are definitely accelerating and dialling up more on cost reduction. But at the same time, we are taking price increases in smaller increments than the kind of commodity price increase that we are seeing,” he added.

For Jaguar Land Rover, this remains an exciting year as it expands its portfolio into battery electric vehicles (BEVs) with the expected launch of four new products in the coming months, TMPV said.

On the domestic front, while commodities are expected to remain elevated, demand remains healthy with rising EV penetration, according to Chandra.

“Looking ahead, our priorities are clear. The demand environment in the industry seems positive and we see a clear opportunity to continue our industry-beating volume growth, leveraging our demand momentum and timely new launches,” Chandra said.

The company will continue to capitalise on the industry's shift towards greener powertrains through our strong products and front-end actions, he stated, and added that we “will need to scale up our supplies and capacity readiness, especially for key models where we are facing constraints”.

The company has already activated a series of structural actions across debottlenecking and supply capacity expansion, which has started to reflect positively in recent months.

“As we navigate the challenging commodity environment, we will need to aggressively accelerate our cost reduction efforts, expedite P&I accruals and undertake calibrated pricing actions. So, overall, it has been a strong quarter for us. The focus now is on disciplined execution, profitability, scaling up supplies and ensuring that our industry-beating sales momentum continues,” Chandra said.