Profits Flatten as JLR Hikes Small-SUV Sales

Tata Motors Ltd.'s Jaguar Land Rover unit estimates that growth of its operating income stalled in the fiscal third quarter ended Dec. 31 because of unfavorable exchange rates and a less profitable vehicle mix.

JLR tells the U.S. Securities and Exchange Commission that earnings before interest, taxes, depreciation and amortization in the October-December period probably matched EBIT in the two preceding quarters.

The success of the Land Rover Evoque small SUV launched in September 2011 has dramatically boosted the company's volume. But it also has been squeezing JLR's return on sales since last April, Bloomberg News notes.

The Evoque, which starts at 29,200 (€34,700), now accounts for almost 30% of the brand's global sales. Evoque profit margins are slimmer than those of the 71,300 (€84,800) Range Rover and the 50,200 (€59,700) Range Rover Sport.

The British unit says its cash flow was probably negative in the latest quarter. JLR also predicts a cash drain in the fiscal year that begins on April 1 as the company boosts capital spending 38% to 2.8 billion (€3.3 billion) to fund vehicle development and a plant in China.