why Tata Motors Share is Falling?

Tata Motors is one of the prominent names in the Indian automobile industry. However, in the last few months it hasn’t been a smooth sail for the company in terms of performance which is why Tata Motors is falling in the Indian stock exchanges.  

In the last few months, Tata Motors share price fell by 44% reaching their 52-week low of Rs.662.10 on February 25 after touching their 52-week high of Rs.1,179.05 on July 30, 2024. The major reasons behind why Tata Motors share is falling are: 

• Weak quarter 3 earnings 
• Price hike 
• Rising competition 
• Tesla's entry 

 

Tata Motors is known for its robust vehicle portfolio. Its portfolio consists of: 

• Passenger cars 
• Commercial vehicles 
• Electric vehicles  

 

It is also leading the way in India's drive towards EV adoption. In addition, its subsidiary Jaguar Land Rover (JLR) has also played a key role in making inroads in the global markets especially in Europe and China. 

Despite these advantages Tata Motors is going through a tough time in the India bourses which is why Tata motors shares are falling. Let’s delve into the major causes of their poor performance in the recent past and figure out if it’s the best time to invest in the stock: 

 

1) Weak Q3 performance 

Jaguar Land Rover (JLR) is a major contributor in Tata Motors revenue and profitability. JLR's December quarter's profits took a major hit which turned out to be a prime reason of Tata Motors weak Q3 performance for FY25.  

In terms of numbers, Tata Motors December quarter profit fell by 22% to reach Rs.5,451 crore from Rs.7,025 crore in the corresponding quarter last year. Also, their revenue from the commercial vehicle segment, which is another major contributor to its total revenue, fell by 8.4% year-on-year to reach the levels of Rs.18,431 crore.   

Tata Motors flagship overseas product Jaguar Land Rover's diminishing demand in crucial markets such as China and Europe is another prime reason behind the company subdued financial performance. In addition to it, constantly rising customer acquisition costs and high warranty expenditure are putting further stress on the company's bottom line. 

However, despite the challenges the company is bullish about the future demands of its vehicles on the back of investments to enhance their existing infrastructure, lined up product launches and stable interest rates. 

 

2)  Increasing competition 

Although Tata Motors is a big name of the Indian automobile industry still it faces stringent competition from competitors such as Maruti Suzuki, Hyundai and Mahindra & Mahindra.   

For example, M&M gives tough competition to Tata Motors in the SUV segment and the former has even surpassed the latter to become India's third-largest car maker in terms of volume.  

In the SUV segment in January 2025, M&M sold 50,659 units which was 18% more than that in the corresponding month last year. During the same time, Tata Motors passenger vehicle sales went down by 10% reaching down to 48,076 units from 53,633 units. 

 

3) Tesla’s arrival in India 

The stock market also sways on sentiments, especially in the short run. Since global EV giant Tesla announced its entry in India, the news has sparked negative sentiment for Tata Motors which has reflected in its share prices.  

Additionally, media reports have indicated that amid Trump's tariff threats the Indian government could reduce import duties on electric vehicles smoothening Tesla's entry in India which could intensify Tata Motors competition in India.  

To add salt on their wounds Tesla has even started hiring in India through LinkedIn and there are reports that Tesla is aiming to poach engineers and employees from Tata Motors to expedite their prominence in India. 

 

4) Increasing price of product line 

Tata Motors is known for its competitive prices and quality products, yet they announced a 2% price hike on its trucks and buses. The company attributed this hike to the rising cost of raw materials and also stated the hike will apply to all models and variants. The hike on trucks and buses follows another recent 3% hike on Tata's passenger cars including EVs which took effect from January 2025.  

Tata is not the only company to pass the burden of rising cost of raw materials and operations onto the customers, in fact it has become an industry-wide trend. Prices of all cars ranging from small to luxury ones have risen which has increased the burden on the pockets of the consumers. 

We know that the Indian market is quite price sensitive, and the rise is price has got the investors worried as Tata Motors was already going through tough times. To worsen the situation this recent price has added to the woes of Tata Motors’ investors which led to the further decline in company’s share price.  

 

 

How does the future lie for Tata Motors? 

Though Tata Motors is grappling with challenges, yet the company is striving hard to overcome the challenges and secure long-term growth. The company is already a leader in the EV segment, and planning to launch new EVs like Harrier EV and Sierra EV and simultaneously Tata Motors is focusing on building on Hydrogen trucks and car and today on 04-march-2024, company flag-off country’s first Hydrogen Truck Trials.

Tata Motors wants to launch an EV variant of its every model by 2030 to further strengthen its dominance in the EV space. Also, the company is also emphasizing cost optimization by streamlining their cost of production and effective operational management.  

In the commercial segment, their focus is on increasing the payload capacity of their vehicles and launching new variants along with improving their financing services. The company would want to carry out all these steps effectively and efficiently to lower their margin pressures and improve their profitability.