Tata Motors Q3 hits China wall: Major takeaways

Daniel Fowler
February 8, 2019

Revenues fell by £100m to £6.2bn as vehicle sales fell to 144,602 for the quarter, nearly 10,000 less than the previous year.

Tata Motors wrote down its investment in Jaguar Land Rover by $3.9 billion due to market challenges, especially in China, technology disruptions and rising debt costs.

Plummeting sales in China are compounding Jaguar Land Rovers challenges that include the industry's shift away from vehicles powered by gasoline and diesel, a stronghold for the company.

Jaguar Land Rover has posted a £3.4 billion (RM17.9 billion) loss for the fourth quarter of 2018, driven partly by sluggish sales in China and a reduction in the value of its plants and other investments.

JLR's retail sales in China, which account for about one in every seven of its cars sold worldwide, fell by 40% year on year during the quarter, overshadowing growth in the United States and British markets.

The firm said "significant market, technological and regulatory headwinds" were affecting the sector, while investment in new models and changing technology was still high.

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Daimler AG and BMW AG reduced profit forecasts previous year amid pressures from the US-China trade war that's hit auto demand, while Hyundai Motor Co. said last month its letting workers go as it reviews production plans in the worlds biggest market.

"Given the muted demand scenario and the associated impact on the financials, JLR has concluded that the carrying value of capitalised investments should be adjusted down, resulting in a non-cash 3.1 billion pre-tax exceptional charge and an overall pre-tax loss of 3.4 billion for the quarter", Tata Motors said in a statement. United States sales rose 20 per cent and 18 per cent in the UK. We continue to invest in exciting products and leading edge technologies.

JLR realised £500m of cash improvements through the "Charge" programme in the third quarter. This is expected to result in a one-time exceptional redundancy cost of around 200 million pounds for the luxury unit of Tata Motors.

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. Net revenue was also down 1 percent to 6.2 billion pounds ($8 billion) during the quarter.

Dr Speth added: "This is a hard 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".

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