Falling Jaguar Land Rover sales widen Tata Motors' losses
- Tata Motors reported a loss of ₹36.8 billion in Q1 FY20.
- While trouble continues with its subsidiary Jaguar Land Rover, the company claims JLR is undergoing a major transformation.
- Tata Motors’ net revenue fell by 8% for the first quarter.
Its revenues too have gone down by 8% to ₹608 billion. “Over the past few years we had struck a good balance between managing market dynamics and financial health. However, this time, despite our continuous turnaround effort we could not prevent some impact on our Q1 performance,” said Guenter Butschek, CEO and MD, Tata Motors, in a statement.
Tata Motors, like all other auto companies is facing the heat of sales slowdown. Adding to that are from its UK-owned subsidiary Jaguar Land Rover. This subsidiary’s net revenue stood at ₹50.74 billion, 2.8% lower than it was, last year.
"The continued slow down across the auto industry due to weak consumer sentiments, liquidity stress and the impact of axle load effect particularly in medium/heavy duty, impacted overall demand,” said Butschek.
‘Adapting to the environment’
Global rating agencies Fitch Ratings and Moody’s both had downgraded Tata Motors with a negative outlook. Jaguar Land Rover’s global sales continued to decline in May with the company reporting a 12% dip in May 2019. In June 2019, its sales dropped by 9.6% year-on-year.
In June 2019, Tata Motors reported a 14% decline in India sales, while a 5% drop was seen in global sales.
However, Tata Motors still hopes for a turnaround. “With the Budget announcement and upcoming festive season, we expect some tailwinds for the remaining FY20,” said Butschek.
The company also hopes to gain from JLR and BMW’s collaboration on building the next-generation Electric Drive Units. “Jaguar Land Rover is in a period of major transformation. We are simplifying our business, delivering on our product strategy and adapting to the tough market environment. We will build on our strong foundations and increased operating efficiency to return to profit this fiscal year,” Prof. Dr. Ralf Speth, JLR Chief Executive.