Tata counts cost of Jaguar’s sales slump
A MASSIVE write-down at Jaguar Land Rover drove down shares in parent company Tata Motors to an eight-year low and a 270bn rupee (£2.9bn) quarterly loss – thought to be the largest in Indian corporate history.
Collapsing sales of Jaguar Land Rover cars in China and a plunge in demand for diesel-engined vehicles are behind heavy losses at the Uk-based car maker.
JLR’S debt levels are also rising and its heavy manufacturing presence in the UK leaves it exposed to a disorderly Brexit. As a result, Tata Motors revealed it took a $3.9bn (£3bn) writedown on its investment in JLR in the last quarter of 2018. It bought the company from Ford in 2008 for £1.5bn.
The news sent shares in Tata Motors down by almost 30pc. This time a year ago, Tata Motors made a £130m quarterly profit. The shares later clawed back some ground to close 17pc lower on the National Stock Exchange of India. It was the stock’s biggest one-day fall since Feb 1993.
“This is a difficult time for the industry, but we remain focused on ensuring sustainable and profitable growth, and making targeted investments, that will secure our business in the future,” said Ralf Speth, the JLR chief executive.
The car maker is slashing costs in a bid to stay afloat. Last month, it announced it was cutting 4,500 jobs worldwide and this week credit rating agency Fitch placed it on a negative watch. “Trade barriers and logistic issues from a disorderly Brexit could have an impact on JLR’S competitive positioning and lead to lower sales and profitability,” Fitch said.