MUMBAI: Jaguar Land Rover’s owner Tata Motors Ltd fell to the lowest level in more than six years in Mumbai trading after the luxury carmaker said it was shuttering production because of weak demand in China.
Production at Solihull plant in the UK will be stopped for two weeks in October, the company said after sales in China declined 46% last month. Demand in the world’s biggest auto market dropped because of uncertainty resulting from import duty changes and continued trade tensions, the automaker said in an emailed statement Monday.
Performance of the marque brands is critical for Tata, which gets more than three-fourths of its revenue from the U.K. units it bought from Ford Motor Co. about a decade back. Chinese vehicle sales have been tumbling for carmakers including General Motors Co. as slowing economic growth, a weakening currency and losses in the stock market add to the woes from a tit-for-tat trade dispute with the U.S.
Shares of Tata Motors slumped 14.7% to 181.25 rupees at 12.20pm in Mumbai, the lowest intraday level since January 2012. Analysts are still optimistic about the company, with 29 of 41 analysts tracked by Bloomberg having a buy rating on the stock.
“JLR is the real backbone of Tata Motors in terms of profitability,” said Deepesh Rathore, London-based director at Emerging Markets Automotive Advisors. “Any slide of JLR fortunes will adversely impact Tata Motors.”
Jaguar Land Rover’s weak performance in China comes as the company braces for the possibility of a hard Brexit. Last month, Jaguar Land Rover Chief Executive Officer Ralf Speth warned Prime Minister Theresa May that a bad Brexit deal could put tens of thousands of jobs at risk and cost the company more than 1.2 billion pounds a year (US$1.6 billion).