Tata Motors’s Profit Begins to Drop image

Today, August 10th, is the second day Tata Motors fells in Mumbai trading, due to decreasing demand for luxury vehicles in Europe.

In Mumbai at 9:47 a.m. Tata fell 1.8% to 235.10 rupees, and the benchmark BSE Sensitive Index dropped 0.2%. Yesterday the automaker declared that its net income increased 12% to 22.45 billion rupees ($406 million), much lower than the analysts’ estimates of 27.3 billion-rupee.

Credit Suisse Group also decreased its rating on the stock, due to rising concerns that Jaguar Land Rover, Tata’s British luxury-vehicle unit, is facing pressure to revamp the its aging models and lower prices in markets such as China.

“Demand is clearly slowing for JLR on uncertainty in Europe,” said Basudeb Banerjee, an analyst with Quant Broking Pvt in Mumbai. “The next quarter too may be lackluster and the third quarter will be crucial.”

Last quarter JLR sold 83,452 units, up 34%, down from 48% increase in the previous quarter, while Tata’s sales were up 29% to 431.7 billion rupees. In June JLR’s sales were down for the first time in seven months and its SUV deliveries were down for the third month.

“We expect to maintain these margins going forward, but there remain challenges,” said Jaguar Land Rover Chief Executive Officer Ralf Speth. “Nobody can predict what’s going to happen with the economy in Europe. We are cautious.”