Tata Motors’ Jaguar Land Rover woes come home to roost

Tata Motors Posts Rs 26,993 Crore Quarterly Loss Its Biggest Ever

Indian automaker Tata Motors Ltd lowered its profit margin guidance for the current fiscal year after it posted its biggest quarterly loss on Thursday, hurt by an impairment charge for its British luxury vehicle business Jaguar Land Rover (JLR).

JLR, which has its engine manufacturing centre at the i54 to the north of Wolverhampton, and auto plants at Solihull, Castle Bromwich and Halewood in Merseyside, reported a £273 million pre-tax loss for the last three months of 2018.

The Indian owned vehicle maker further recorded a £3.1bn impairment charge.

"We are taking the right decisions now to prepare the company for the new technologies and strong product offensive for the future", JLR's chief executive Ralf Speth said.

"The economic slowdown in China continues to impact consumer confidence but, as part of our turnaround plan, we are working extensively with our retailers to rejuvenate sales".

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It is likely a recognition that previous investment in technology to build diesel-engined cars - which has long made up the bulk of Jaguar Land Rover's sales - won't be recouped due to the slump in demand for the powertrain.

Daimler and BMW reduced profit forecasts a year ago amid pressures from the United States-China trade war that has hit vehicle demand, while Hyundai Motor said last month it was letting workers go as it reviews production plans in the world's biggest market. It cited some problems in its Jaguar Land Rover unit.

Production imbalance in the JLR business exposes Tata Motors' credit profile to a no-deal Brexit scenario, whose likelihood has risen over the past few weeks.

"Tata Motors has bitten the bullet", Ajay Bodke, the Mumbai-based head of investment strategy at Prabhudas Lilladher Pvt Ltd said by phone.

Our Bureau The shares of Tata Motors dived further after Fitch Ratings on Wednesday put the company on negative watch over JLR's Brexit woes.

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The results are the first since JLR announced in January that it was to cut about 4,500 jobs from its global workforce.

JLR, which employs more than 4,000 people at its factory in Halewood on Merseyside, reported a pre-tax loss of £273m for the three months to December 31 but also revealed a £3.1bn write-down in the value of its plants and other investments.

Jaguar Land Rover ended the quarter with £2.5bn of cash, after repaying a $700m bond which matured in December.

"Tata Motors domestic business continues the strong momentum and has delivered market share gains as well as profitable growth".

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