Tata Motors under pressure over falling demand for luxury cars

Mumbai: Tata Motors lost over 17% of its stock value on Friday, i.e. previous trading day. The knee jerk reaction came after the automobile company reported a consolidated quarterly loss of Rs. 26,961 crore, the largest so far in its history.

Analysts predict a cut in company’s earnings estimate by over 30% in light of depleting fortunes of its luxury car brand Jaguar Land Rover (JLR). China being the largest market for JLR, has been showing reduced demand and further dented margins eroding profits for the quarter ended December 2018.

The company itself cut its margin guidance on account of business uncertainties. The guidance for the period between FY20 and FY22 has been reduced from 4-7% to down now 3-6% by the company itself.

JLR sales was down 47% to 22,000 units, while its peers in luxury car market did not show such heavy slowdown.The company has written down on account of impairment of asset value for JLR business by 37.5% due to the growing risks.

A lot for the company depends on a deal between UK and the European Union. In case of vast unfavourable deal, it may hamper sales of luxury cars like JLR on account of fall in demand.

Tata Motors opened under pressure in todays trade, testing lows of 145.85 while recovery was seen after a while taking the stock to 151.95 a piece. At the time of writing, stock traded at 150.20 a piece.

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Free Press Journal