Jaguar stutters to £3.4bn loss after demand stalls

Jaguar stutters to £3.4bn loss after demand stalls

In December Jaguar Land Rover's owner Tata was hit with its second credit rating downgrade in just five months as a result of Jaguar Land Rover's struggles - which include slumping diesel demand and declining sale in China. It anticipates a loss for the financial year as a whole for the first time in a decade.

The result is the company's worst quarterly loss, driven in part by a £3.1 billion ($5.7 billion) write-down on the value of its investments.

On Thursday, Honda became the latest carmaker to acknowledge an industry-wide decline in the market for diesels.

Carmakers around the planet are getting hurt by the slump in China, whose vehicle market shrank for the first time in more than two decades a year ago.

JLR's retail sales in China, which account for about one in every seven of its cars sold worldwide, fell by 40% year on year during the quarter, overshadowing growth in the United States and British markets.

Sales in China fell 47% y-o-y last quarter offsetting 21% and 18.4% increase in North America and the United Kingdom respectively.

The extent of the financial problems besetting Britain's largest automotive manufacturer and employer has been laid bare less than a month after it announced 4,500 job cuts across its United Kingdom facilities, mainly in the West Midlands.

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The majority of the cuts are expected in United Kingdom management roles, costing the company £200m.

While JLR, which contributes two-thirds of the earnings at Tata Motors, surpassed the overall industry growth for premium passenger vehicles in the US, UK and Europe, it continued to face sustained weakness in demand in China amid slowing economic growth, Balaji said.

Excluding the one-off accounting charge, JLR lost £273m before tax during the last quarter. The step raises questions on whether it could affect Tata Motors' credit rating that has already been revised downward in the recent past.

Tata Motors Ltd on Thursday forecast its United Kingdom unit Jaguar Land Rover (JLR) Automotive incur an operating loss this fiscal year mainly because of continued muted demand in JLR's single-largest market, China.

It follows downgrades for parent company Tata late past year. It delivered £500m of the programme in the third quarter.

"JLR's margin level is likely to be marginally negative during FY19". The company is pinning its hopes of a short-term turnaround on returning to sales growth in China, alongside its cost-cutting programme. The £273 million pre-tax loss compares with a £90 million loss in the previous quarter of 2018, running from July until September. It also plans to build a battery plant at Hams Hall in Birmingham, which will be operational by 2020. The new Land Rover Defender will be revealed later this year.

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