Boston, MA 05/20/2014 (wallstreetpr) – The Mumbai-based automobile company Tata Motors Limited (ADR) (NYSE:TTM) will supply a bulk car order this month to an inter-state transport company in India. The order involves three vehicle platforms that are designated as poor sellers in the market. The bulk order also comes at a time when the company has faced increasing challenges in its sales.
Tata will supply 2,000 cars to Siddhivinayak Logistics Limited (SVLL) starting this month. The ordered cars are of Aria, Manza and Indigo eCS types. The cars have not sold well in recent years. SVLL is a transport company that provides inter-state connections and the passenger cars ordered from Tata will boost its fleet. At the same time, the bulk order comes as a booster dose for Tata Motors Limited (ADR) (NYSE:TTM) that has had little joy in its sales in recent years.
In April 2014, Tata witnessed its sales down by more than 7 percent compared with the same month last year. The April sales slump followed a series of declining sales at the company that saw Tata Motors Limited (ADR) (NYSE:TTM) drop to No. 4 from No. 3 among the top car makers in India. However, the company last week moved to assure the investor community about its future, saying that its capacity building, operation efficiency and improved sales and marketing department will help it reclaim top spot among car makers. The just announced bulk order indicates a step in the right direction.
The announced bulk deal with SVLL may not have significant support for the bottom-line given that bulk orders usually come at negotiated lower prices that in turn reduce profitability. However, the fact that the order involves some of the company’s laggard car platforms makes it a great deal especially in the face of shrinking sales.
The company continues to develop vehicles that have a wider appeal and eco-friendly. It announced plans to bring to the market electric, hybrid and alternative fuel cars in the next few years to diversify its market and support higher revenue.