Jaguar Land Rover causes biggest loss in Indian corporate history
Posted February 8, 2019 8:15 a.m. EST
CNN — Slumping sales at Jaguar Land Rover are giving its Indian parent company a huge financial headache.
Shares in Tata Motors plunged as much as 30% in Mumbai on Friday after it reported a loss of $3.8 billion in the quarter ended December — the biggest in Indian corporate history, according to local media.
The loss was entirely due to the plunging value of Britain's biggest carmaker, which accounted for most of Tata's $11 billion revenue in the quarter. Tata took a £3.1 billion ($4 billion) hit as it slashed the value of Jaguar Land Rover on its books to £6 billion ($7.8 billion).
Jaguar Land Rover is under pressure on several fronts. Its sales in China — the world's biggest car market — fell 40% in January compared to the same period last year.
The Chinese auto market has been one of the hardest hit by the country's ongoing trade war with the United States, with car sales in the country falling last year for the first time in two decades.
"Our overall performance continued to be impacted by challenging market conditions in China," CEO Ralf Speth said in a statement Thursday. "We continue to work closely with Chinese retailers to respond to current market conditions," he added.
Closer to home, Jaguar Land Rover has felt the collapse in diesel vehicle sales in Europe in the wake of Volkswagen's emissions scandal. Huge uncertainty about the United Kingdom's exit from the European Union, which accounts for more than 50% of UK car exports, has added to the pain by depressing sales and investment.
The UK car industry last week warned of "permanent devastation" if the United Kingdom crashes out of the bloc on March 29 without a deal that protects trade links.
Jaguar Land Rover's production fell by nearly 16% last year to around 450,000 vehicles.
The company has axed more than 6,000 jobs in recent months as part of a $3.2 billion cost-cutting plan, and last year put 1,000 of its UK workers on a three-day work week.
Tata Motors bought the iconic British carmaker for $2.3 billion from Ford in 2008. The Indian company's core domestic business sold more than half a million vehicles last year and made a profit of about $87 million in the quarter ended December.