Tata Motors Bigger Worry: Commodity Cost Uncertainty Than Price Increases

Tata Motors Passenger Vehicles (TMPV) is more concerned about the uncertainty of sustained high commodity costs than the price increases themselves, which are impacting margins.

The company's consolidated revenue rose 9.3% year-on-year in Q1 FY27 to Rs 95,800 crore, but net profit fell 80.3% due to elevated commodity costs and JLR supply constraints.

However, the company sees robust EV demand with its EV penetration rising to 25% this year from about 14% last year, and monthly production doubling to over 16,000 units currently.

Shailesh Chandra, managing director and CEO of TMPV, said that while commodity prices had increased significantly over the past five to six months, the company couldn't pass on the increases to customers at the same pace. The uncertainty around how long commodity costs will remain under pressure is a greater worry for the company.

The cost pressure is affecting margins and requiring a faster cost-reduction effort, with Chandra noting that 'the greater worry is the uncertainty bit of it...The basket of commodities (which TMPV consumes) that we have, all move in different directions depending on how the oil prices are also moving.'