It was only a year ago that Tata Motors must have felt they made the wrong investment decision acquiring the prestigious British marques Jaguar and Land Rover. Bought for around $2.3 Billion from cash-strapped Detroit automobile leader Ford Motors, those brands went into Tata's umbrella just as the fury of the global economic crisis was taking its peak. Understandably, those months would not be seeing any encouraging sales for the two marques.But come 2010, a more upbeat economy that is seeing the end of the global recession has translated into sales that have brought the new Jaguar Land Rover division of Tata Motors into the pink of health. The growing demand for commercial vehicles has seen the increase in Jaguar Land Rover (JLR) sales that is sure to boost positive sentiment among investors.August posted a sales volume growth of 29% year-on-year as JLR sold 16,220 units. Sales revenues in the US and other world markets were likewise in line with growth trends. Year-to-date aggregate sales oh Jaguar Land Rover sales have reached 92,759 units, 46% year on year.Market analysts from Religare Research have forecasted that JLR's sales to average 19,400 units on a monthly basis. The positive results make a good conviction in the management's sales projection of 240,000 units for the 2011 fiscal year with the China market getting 25,000 units.Paralleling the surge in industrial output, the demand for its commercial vehicles (CV) is so strong, analysts are forecasting sales to grow over 15% as truck freight rates get better and consumers as well as business operators replace older vehicles. Sales of its Light CV are also expected to overtake truck sales as most new launches start to cater to increased demand for new models.The India-based Tata Motors is presently operating at 65% utilization in its car and truck manufacturing capacities while squeezing 90% in its LCV (mainly Ace) capacity. According to the Daiwa report, it is clear JLR has enough capacity to meet its forecasted market demands for the next 12 months. Its 35% additional utilization can easily meet this demand while its Ace production at the Uttaranchal plan can still be upped buy 20% with a third shift.The company local pricing has been subject to two price hikes at 1.2% each in April and then in June, while another is expected to take effect in October. Corporate earnings before income tax, depreciation and amortization expenses (EBITDA) are expected to take on added pressure while the company absorbs a 5% increase in operating costs resulting from complying with more stringent emission standards. In addition, input costs could adversely affect margins.Tata Motors expects Capex for its JLR operations to add £800 million during the next couple of years. This can still increase depending on the new emission standards to be adopted in the EU sometime in 2012. Company stock values have gone up to 76% over the last year and analysts remain optimistic that this can still increase with the upsurge in JLR sales growth and increasing CV demand.
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