October 31, 2018 17:56 CET
MUMBAI — Tata Motors announced a turnaround plan for Jaguar Land Rover, which has been hit hard by trade tensions between China and the U.S., low demand for diesel cars in Europe and worries over Brexit.
Under “Project Charge” Tata Motors said it plans to cut costs and improve cash flows at Jaguar Land Rover by 2.5 billion pounds ($3.2 billion) over 18 months.
JLR said new vehicles such as the recently launched Jaguar I-Pace full-electric crossover and the upcoming new Land Rover Defender will help. The automaker also will offer a hybrid or electric version of all its models by 2020.
“Together with our ongoing product offensive and calibrated investment plans, these efforts will lay the foundations for long-term sustainable growth,” JLR CEO Ralf Speth said.
JLR has trimmed its pre-tax profit expectations for the current fiscal year ending March 31, 2019 and expects to break even, Speth said, versus an earlier target of profit growth.
As part of the turnaround plan, JLR will first focus on cash saving “quick wins” such as reducing non-product investments and speeding up asset sales, Tata Motors said in an investor presentation.
In the near term it will improve efficiency in areas including purchasing and material cost, manufacturing and logistics and people and will focus on strategic and non-core asset sales. JLR has already reduced the number of production days at its UK plants in Castle Bromwich and Solihull.
JLR said in the presentation that it has saved 300 million pounds since it initiated the turnaround plan six weeks ago and is working on 500 ideas for the future.
Tata Motors made a loss of 10.49 billion rupees ($141.9 million) for the July-September quarter, compared with a profit of 24.83 billion rupees in the year-ago period.
JLR reported a loss of 101 million pounds during the quarter and its margin on earnings before interest, tax, depreciation and amortisation (EBITDA) fell 130 basis points to 9.9 percent.
Retail sales of its Jaguar sedans and Land Rover SUVs fell 13.2 percent to about 130,000 units, hurt particularly by tariff changes in China and escalating trade tensions.
Demand in China remained muted even after the country cut import tariffs for cars and car parts to 15 percent for most vehicles from 25 percent from July.
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