Tata Motors' overseas woes have finally come home to roost, and how! Sales rose by a fifth year on year in the quarter in the U.S. and by 18% in the UK.
"Jaguar Land Rover is facing headwinds in multiple fronts, including geopolitical uncertainty and technological disruption apart from sluggish demand scenario in a strong market like China", said Debjit Maji, an analyst at Stewart & Mackertich Wealth Management in Kolkata, India.
Tata Motors shares were down 17 per cent at 151 rupees as of 11:10am in Mumbai.
Carmakers around the world are getting hurt by the slump in China, whose vehicle market shrank for the first time in more than two decades previous year.
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In an effort to mitigate to impact of weaker demand in China, JLR is focusing on generating profits for its vehicle dealers, with the company looking to incentivise retail sales over wholesale, Balaji told reporters. "We continue to work closely with Chinese retailers to respond to current market conditions".
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. "They are reinforcing that they are serious about achieving a turnaround, saving costs and taking measures that might be tough". Changes in market conditions, especially in China, technology disruptions and rising cost of debt led to the charge.
Following the news, Tata Motors issued a warning that its JLR unit, will also suffer an operating loss in the year to March, a downgrade on its earlier forecast for the business which predicted that it would manage to breakeven.
Tata Motors' loss came at Rs 26,993 crore ($3.78 billion) for the three months ended December 31, compared with a profit of Rs 1,199 crore in the year-ago period.
The company, which employs 18,500 manufacturing staff in the Midlands and Merseyside, last month said it will cut 4,500 jobs in response to the challenges. Despite the muted growth, Tata Motors has delivered strong results, registered an impressive profitable growth this year on the back of exciting products, renewed brand positioning and aggressive cost reduction.