Jaguar Land Rover's brutal loss due to weak Chinese demand is hammering shares of Britain's biggest carmaker

Uberto / Creative Commons

• Tata Motors' stock slumped 7% on Tuesday after it revealed a record £3.6 billion ($4.6 billion) loss at its Jaguar Land Rover business.
• Revenue fell 6% at Britain's biggest car manufacturer as weak demand in China offset higher sales volumes in the UK and North America.
• Jaguar Land Rover realised £1.3 billion in cost savings and invested £3.8 billion in a bid to turn around its business.
• Watch Tata Motors trade live.

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Shares in Tata Motors slumped 7% on Tuesday after it revealed a record full-year loss of £3.6 billion ($4.6 billion) at its Jaguar Land Rover business, wiping more than 40 billion rupees ($570 million) from the Indian car giant's market cap.

Jaguar Land Rover, Britain's biggest car manufacturer and exporter, posted a 6% fall in revenue to about £24 billion ($30.5 billion) in the year to May. Strong interest in its Jaguar E-Pace, electric Jaguar I-Pace, and Range Rover Velar models drove unit sales up about 8% in the UK and North America, but lackluster demand in China meant overall retail sales slid about 6% to below 579,000 vehicles. Wholesale volumes also fell 11% to around 565,000 units.

Weaker sales contributed to JLR's pre-tax loss of about £3.6 billion - a sharp swing from its pre-tax profit of £1.5 billion ($1.9 billion) in the previous financial year. However, exclude £3.3 billion in non-cash impairment charges and transformation costs, and the loss was £358 million.

JLR's plan to revitalize its business is to cut costs, boost efficiency, and bet on new technologies. It has realized about £1.3 billion worth of cost savings from its 'Charge' transformation program. It has also invested £3.8 billion in developing new products and technologies, expanding manufacturing, and creating products more efficiently. However, the company faces "multiple headwinds simultaneously sweeping the automotive industry," said CEO Ralf Speth.

The Tata Motors division sold more commercial and passenger vehicles to both wholesale and retail customers in the period, sending its net revenue up 20% to 692 billion rupees ($9.9 billion) and generating adjusted pre-tax profits of 26 billion rupees ($373 million). The overall company grew revenue by about 4% to a little over 3 trillion rupees ($43 billion), but it swung to an adjusted pre-tax loss of around 17 billion rupees ($247 million).

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