Wed, Oct 10, 2018 - Page 11 News List

Slump in China demand hurting EU automakers

Bloomberg

Europe’s luxury car titans are bearing the brunt of a slump in Chinese auto demand and investors in India are paying the price.

Jaguar Land Rover’s (JLR) announcement late on Monday about shuttering production for two weeks at its Solihull plant in Britian — because of sinking demand in China — sent shares of its owner Tata Motors Ltd plunging 13 percent in Mumbai, India.

That wiped out US$1.2 billion of its market value, or enough money to buy about 25,000 Jaguar F-Pace SUVs, each priced at about US$47,000.

The British marquee brands said sales in China declined 46 percent last month amid an uncertainty resulting from import duty changes and continued trade tensions.

The world’s biggest luxury automakers BMW AG and Daimler AG have both previously cited the tit-for-tat trade war between the US and China among reasons for issuing profit warnings as Chinese consumers stay away from showrooms.

Performance of the marquee brands in China is critical for Tata, which gets more than three-fourths of its revenue from the British units it bought from Ford Motor Co about a decade ago.

“JLR is the real backbone of Tata Motors in terms of profitability,” London-based Emerging Markets Automotive Advisors director Deepesh Rathore said. “Any slide of JLR fortunes will adversely impact Tata Motors.”

Tata Motors shares fell 13 percent to 184.35 rupees, the largest drop in nine years.

The stock was the biggest mover in India’s benchmark Sensex index, which slipped 0.5 percent.

The Mumbai-based automaker is trading at its lowest level since January 2012.

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