Countries like India, which have maintained a consistent growth rate of around 6% to 8% over the past few years, are making significant forecasts for continued growth in the future as an emerging economy, aiming to become a developed nation by 2045.
This raises curiosity about which sectors are contributing to the GDP. If we take a look at the automobile sector, it contributes nearly 6% to the overall GDP and accounts for 40% of Indian manufacturing. This makes it even more important to understand which companies are performing well in this sector.
Companies like Tata Motors business are making a very significant presence across the globe, with strong business operations in China, Europe, the USA, and India in a highly proficient manner. This makes it important for us to understand how Tata Motors operates globally, as it is one of the key leaders in the Indian automobile sector.
Tata Motors is one of the key companies selling automobiles and passenger vehicles, including luxury models, in Europe. Historically, the automobile industry has been dominated by European and Western countries. However, in the modern world, Tata Motors is taking significant steps toward strong growth in this sector, making India proud through its global achievements.
Revenue breakdown for TATA MOTOR
Tata Motors generates revenue through a diverse portfolio that includes passenger cars, utility vehicles, heavy commercial vehicles, intermediate and light commercial vehicles, small commercial vehicles (SCVs), pickups, and commercial passenger vehicles. The company has a presence in over 125 countries across the globe. In addition to that, it operates 25 manufacturing facilities and 9 research and development centers. This extensive setup allows Tata Motors to maintain strong global supply and support its continued growth.
The company currently has 15 manufacturing sites in India, along with three research and development centers. In North America, it has one research and development center. In China, Tata Motors operates one joint manufacturing facility. In Europe, the company has two manufacturing sites and one research and development center. Additionally, in the UK, it has five manufacturing sites and three research and development centers.
The company has a very strong geopolitical presence across the globe. Most of its revenue comes from India, contributing approximately ₹1,27,755 crore. The second major market is North America, with revenue of around ₹67,496 crore. From China, the company generates about ₹57,184 crore. Apart from these, the UK also holds significant importance, contributing ₹55,009 crore, and Europe adds another ₹55,528 crore, making a strong overall contribution.
The company has also stated that it achieved one of its highest revenues, reaching approximately ₹4,73,928 crore in the financial year 2024. This marks the highest revenue in its history. Additionally, the company recorded its all-time highest net profit of ₹31,807 crore.
Commercial vehicle segment
Tata Motors operates in the commercial vehicles business, which makes a significant contribution of nearly 18% to the company’s overall revenue. In the previous financial year, it generated revenue of ₹78,791 crore from this segment, with total sales of 4,05,471 units.
The company has a diverse product portfolio in this segment, including models like Signa, Prima, Magic Ambulance, Starbus, ACE EV, Yodha 2.0, and Tata 407. For international markets, it offers vehicles like the Xenon X2 and the Prima Euro 5 range. This wide product range has helped the company achieve its highest-ever performance in the commercial vehicle segment.
In this wide portfolio, the inclusion of EVs also demonstrates that the company is laying a strong foundation for the future in the electric vehicle space.
Passenger vehicle segment
In the passenger vehicle segment, Tata Motors has the second-largest sales network in India. In this segment, the company generated approximately ₹52,353 crore in revenue, contributing around 12% to its overall revenue. In the financial year 2024, Tata Motors sold nearly 5,73,541 units in this segment.
In this particular segment, the company has a portfolio that includes models like Tiago, Tigor, Altroz, Punch, Nexon, Harrier, and Safari. Among these, Nexon and Punch were among the top-selling SUVs.
The company has stated that it achieved nearly a 100-basis point margin improvement in this segment. Additionally, it is continuously enhancing and expanding its experience in the electric vehicle (EV) space.
The Jaguar Land Rover (JLR) segment
The Jaguar Land Rover (JLR) segment is considered the core and backbone of Tata Motors’ overall business. This segment contributed around 69% of the company’s consolidated revenue. In the previous financial year, Tata Motors generated significant revenue from this segment by selling approximately 4,01,303 units globally. The company’s portfolio includes globally popular models such as Range Rover, Discovery, and Defender, which continue to drive strong demand worldwide.
In the upcoming period, Tata Motors is set to launch several new products under the Jaguar and Land Rover segment. These include models like the Tata Range Rover Evoque, Discovery Sport, Range Rover Sport SV, Defender OCTA, and the Range Rover Electric. These additions represent key developments in the company’s future product portfolio for the Range Rover and Jaguar Land Rover segment.
Electric vehicle segment
The company is also making strong progress in the electric vehicle (EV) space. In the Indian market, Tata Motors is a leading player in the EV segment, having generated nearly ₹93,000 crore in revenue and selling approximately 73,844 units across the country. At the same time, the company is making continuous efforts to further accelerate growth in this segment.
For this segment, the company has a portfolio that includes models like the Tiago EV, Tigor EV, Punch EV, Nexon EV, and Xpress-T. In the upcoming period, Tata Motors plans to launch updated versions such as the Punch.EV, Nexon.EV, and NuNexon.EV, along with more advanced models featuring greater range and improved technology.
How TATA MOTOR expenses occurs
Expenses in Tata Motors’ business model are quite straightforward, as the company operates primarily by selling vehicles across the globe. Naturally, the largest expense is the cost of raw materials and components used in manufacturing the vehicles. As a result, the highest expense for the company is the cost of materials consumed, which amounts to approximately ₹2,49,277 crore.
The employee cost for the company is approximately ₹44,486 crore. Additionally, Tata Motors incurs around ₹25,040 crore in expenses for the purchase of products for sale. Apart from these, the company also has depreciation and amortization expenses totalling nearly ₹27,270 crore.
Future outlook for the Tata motor business
Tata Motors has recently announced the approval of a demerger plan. The company intends to separate its commercial vehicle business and passenger vehicle business into two distinct entities. This strategic move aims to provide focused growth opportunities and better sector-specific performance for each business segment.
The company’s management has stated that they are committed to sustaining growth in the coming years. In addition, Tata Motors aims to become a leader in electric vehicles (EVs) and sustainability. As of now, Tata Motors holds a dominant 70% market share in the four-wheeler EV segment. Although competitors like Mahindra and Maruti are beginning to challenge this position, the company remains focused on pursuing sustainable and long-term growth.
Each year, the company continues to show growth, which reflects its strong sustainability in business operations. Tata Motors has established a powerful global brand and maintains a significant presence in key regions such as Europe and the UK. One of the major strengths of the company is its wide network of manufacturing facilities around the world. These facilities not only enhance production capabilities but also help the company benefit from various government incentives.
According to the IMF forecast, India is expected to grow by 6.8% in 2024 and 6.5% in 2025. This indicates that India is on track to maintain sustainable growth in the coming years. Additionally, in the interim budget, the Indian government announced its intention to increase capital expenditure to ₹11.11 lakh crore, signaling a strong commitment to infrastructure development. This creates a positive outlook for companies like Tata Motors, which are likely to benefit from this sustainable growth environment.
The company is supposed to be India’s highest automobile company in terms of spending on research and development. In the financial year 2024, the company invested nearly 29,000 crore rupees in research and development. This shows that the company is heavily investing in its future business globally, highlighting its strong intention for growth.
An obstacle for Tata Motors’ business is that the company’s core business relies heavily on Jaguar and Land Rover. This is a key factor, as it contributes nearly 70% of the total revenue.
Since the company does not generate strong revenue from this segment domestically, it has to rely on Jaguar and Land Rover for markets like North America, Europe, the UK, and China. This shows how global events significantly impact this segment. The global economy is expected to grow by nearly 3.1 to 3.3 percent in the near future, while India’s growth is projected at around 6.5 to 7 percent. This highlights the difference and suggests that other segments may contribute more in the future compared to Jaguar and Land Rover.
Impact on Tata motor business – value migration in sector, tesla’s India entry, interest rate, inflation and global conflict
In previous years, due to the Russia-Ukraine war, the economies of Europe and North America were impacted by higher inflation and higher interest rates. Since the automobile sector is considered a luxury segment, this had a significant negative effect. Historical data shows that during periods of high inflation, automobile sales tend to drop sharply. This also affected the sales of Jaguar Land Rover in Europe and North America. If such events occur again—like even higher inflation and increased interest rates—it could negatively impact Tata Motors’ sales.
Another important point is that Tata Motors faces strong peer competition from around the globe. If we take a closer look at the EV segment, which is expected to become one of the highest revenue contributors for the company in the long term, competition is significant. The government is actively promoting the adoption of more electric vehicles. In this space, Tata Motors faces competition from Tesla, although Tesla currently has no sales or presence in India, mainly because it does not manufacture vehicles domestically.
If the geopolitical situation changes and Tesla enters India with local manufacturing, it could pose a serious challenge for Tata Motors. Tesla’s global excellence and dominance would introduce a strong competitor in the Indian market. This is a crucial factor, and it explains why Tata Motors has invested such a large amount in research and development—to drive innovation and advance its technology in preparation for future competition just like the companies GRSE, HAL also do.
One of the main reasons Tesla has not yet entered India is that the company wants to start with a manufacturing facility, rather than just importing vehicles. Additionally, there is the China factor—India is aiming to reduce investments and dependence on Chinese companies, which is a separate issue. In Tesla’s case, if they begin manufacturing in India, it would be significant because nearly 6% of India’s GDP comes from the automobile sector.
This sector is also crucial for supporting MSMEs and has a long-lasting impact on the overall economy. That’s why the Indian government is cautious about allowing foreign investments without local manufacturing. If this situation changes, it could significantly impact the entire automobile industry in India.
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