Jaguar Parent Tata Motors’ Loss Widens as Pandemic Hits Car Sales

Tata Motors Ltd. reported a wider loss on a weak demand.

Tata Motors Ltd., the Indian owner of British luxury carmaker Jaguar Land Rover, reported a wider loss on weak demand as Asia’s third-largest economy remained shut for months following the coronavirus outbreak.

Tata Motors posted a loss of 3.14 billion rupees ($42.6 million) in the three months ended Sept. 30, widening from a 2.2 billion-rupee loss in the same period a year earlier. JLR reported a 65 million-pound ($85 million) profit before tax during the quarter, Tata Motors said in a statement to stock exchanges Tuesday.

JLR expects to be profitable into the second half of the financial year that ends in March 2021 backed by a cost-reduction plan, new model launches and sales in China, even as its outlook remains uncertain due to the Covid-19 pandemic, the luxury marque said in a statement. The carmaker has over 3 billion pounds in cash, and expects to be free cash flow positive over the second half.

Key Insights:

  • Mumbai-based Tata Motors is grappling with the worst slowdown in the history of Indian automobile industry with sales unlikely to return to pre-pandemic levels for at least another four years.
  • Tata Motors plans to cut the company’s debt to “near zero” in the next three years.
  • JLR’s China sales rose 14.6% over the previous quarter and 3.7% year-on-year.
  • Even before the Covid-19 pandemic shuttered dealerships and factories around the world, JLR struggled with stricter emissions limits and Brexit uncertainty.
  • Tata Motors may struggle to achieve an earnings turnaround in the coming quarters as persistent sales headwinds point to a long road to recovery for JLR, according to a Bloomberg Intelligence note.

Market Reaction:

  • Tata Motors shares rose 1.5% in Mumbai Tuesday.
  • Results were announced after market hours.

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