Jaguar Land Rover woes drive Tata Motors to biggest quarterly loss

Jaguar Land Rover staff in England

Jaguar Land Rover staff in England

Shares of Tata Motors Ltd on Friday plunged as much as 30%, its maximum single day fall since February 1993, as many brokerages downgraded the stock and cut its target price after the company posted the biggest loss in India's corporate history due to an impairment charge for its luxury auto unit Jaguar Land Rover. This accounting adjustment is consistent with the other decisive actions that we must take as part of our "Charge" and "Accelerate" transformation programmes to create an efficient and resilient business, enabling Jaguar Land Rover to counter the multiple economic, geopolitical, technological and regulatory headwinds presently impacting the automotive industry. If the deal between United Kingdom and the European Union is worse than expected, it may hit the demand for luxury cars like JLR and the fall in sales as a result of it may further erode the share value.

Jaguar Land Rover booked a loss for the last three months of 2018 as sales collapsed in China.

In JLR, the market conditions continue to be challenging particularly in China, Chandrasekaran said. Its heavy production presence in the United Kingdom exposes it to a disorderly Brexit, the likelihood of which has risen over the past few weeks, Fitch Ratings said this week.

The extent of the financial problems besetting Britain's largest automotive manufacturer and employer has been laid bare less than a month after it announced 4,500 job cuts across its United Kingdom facilities, mainly in the West Midlands.

The majority of the cuts are expected in United Kingdom management roles, costing the company £200m.

It has already announced plans to cut thousands of jobs.

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JLR sold 144,602 vehicles in the last quarter, down six per cent year-on-year.

JLR reported revenues of £6.2 billion and a pre-tax loss before exceptional items of £273 million with 2.6% negative EBIT margin for the quarter.

"Overall performance continued to be impacted by challenging market conditions in China", JLR CEO Ralf Speth said.

In a presentation to investors, JLR said demand is likely to "remain muted due to geopolitical, economic, financial and regulatory factors" in the coming months.

The company posted a record loss due to slowing sales in China.

The dour numbers prompted Tata investors to make a beeline for the exits as markets opened on Friday, with shares of the company skidding to their lowest in nine years at one point. The new Land Rover Defender will be revealed later this year.

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