Tata Motors is looking for partnerships to revive Jaguar Land Rover
- Tata Sons Chairman N Chandrasekkharan made a big revelation at the Annual General Meeting.
- The very nature of this business demands continuous investment in product and technology development, he said.
- Jaguar Land Rover's depleting fortunes have been a big drag on Tata Motors.
Last year, Tata Motors had to take an impairment-- write down the value-- of ₹27,838 crore due to weak sales and profitability at JLR. Things continue to look bleak even after 4,500 jobs were axed.
This posed a question in front of N Chandrasekharan, the Chairman of the group's parent Tata Sons, on how long will the conglomerate continue to back the bleeding giant. "A company cannot shut the cash tap as the very nature of this business demands continuous investment in product and technology development," he reportedly said at the Annual General Meeting.
Advertisement"There are many discussions from tactical to strategic for such partnerships. Opportunities are coming and we keep evaluating them and as long as it is in the interest of Tata Motors. We will forge such partnerships so that we are able to address the capex issue," he told the shareholders. Tata Motors has already joined hands with German giant and rival BMW recently for a collaboration for manufacturing electric vehicles under the JLR banner.
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Any recovery for the JLR hinges a lot on how Brexit unfolds. “Uncertainty around an orderly outcome of Brexit negotiations and the evolving global tariffs situation pose risks, in particular to TML's JLR business, which faces a significant level of production-sales mismatch due to concentration of its production base in the UK,” global ratings agency Fitch said while downgrading Tata Motors for JLR's troubles.
Aside from Brexit, the US-China trade war and signs of a slowdown in the global economy are also compounding JLR's problems. China has traditionally been one of the biggest markets for the luxury car but sale volumes fell a sharp 29% between April and June this year, compared to the same time last year.
A month back, credit rating agency Moody’s had downgraded Tata Motors. In addition to JLR related troubles, Tata Motors’ domestic business is also troubled by a general slowdown in the auto market. In June 2019, Tata Motors reported a 14% decline in India sales, while a 5% drop was seen in global sales. The stock has lost over 50% of its value in the last one year.
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