Jaguar Land Rover to Revamp Chinese Dealer Network After Loss

Jaguar Land Rover staff in England

On a standalone basis, Tata Motors posted PAT of Rs 617.62 crore as against Rs 211.59 crore in the year-ago quarter.

Half of that figure came as JLR admitted its investments in land and facilities weren't worth what they originally though, while the other half is attributable to "goodwill impairments", essentially an acknowledgment future earnings potential is likely diminished.

Carmakers are being hit by stronger regulations and demand for cleaner models. On Thursday, Tata said there will be no further job losses at JLR beyond those already announced. While revenues at the United Kingdom subsidiary were down 1 per cent to 6,233 million pounds over the year-ago quarter, margins contracted by 360 bps to 7.3 per cent. The US remained the largest market for the two brands, with retail sales of almost 40,000 units, a growth of 21 percent in January. While JLR's growth in most of its key markets, including the UK, Europe and the U.S., has been satisfactory, China "has been a problem", he said.

Last month Jaguar Land Rover joined Honda and Toyota in announcing a post-Brexit temporary plant shutdown, which will affect all three of its United Kingdom vehicle factories, as well as its engine plant in Wolverhampton. The £273 million pre-tax loss compares with a £90 million loss in the previous quarter of 2018, running from July until September.

Paras Bothra, President Equities at Ashika Stock Broking told The Hindu, "Tata Motors has been a big under performer in the current fiscal and with China slowdown and Briexit, JLR sales will continue to suffer and impact its parents profitability". It delivered £500m of the programme in the third quarter. Lower China sales, production shutdown, higher depreciation and amortisation affected the company.

Although the latest accounting write-down will not affect JLR's cash holdings, the company said it is carrying out a "reassessment of investment spending to ensure adequate returns".

The company announced last month that it would reduce its global workforce by 4,500 people.

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. It also plans to build a battery plant at Hams Hall in Birmingham, which will be operational by 2020.

FILE PHOTO: The 2017 Land Rover Discovery is pictured at the 2016 Los Angeles Auto Show in Los Angeles, California, U.S November 16, 2016.



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