Tata Motors, Jaguar Land Rover, has recorded a $1 billion loss

Cambodia Compass report, 19th May - Tata Motors, the owner of Jaguar Land Rover (JLR), has recorded a shocking quarterly loss of more than $1 billion (£700 million). It came as the Indian firm wrote off $2.1 billion in restructuring costs related to its luxury car business in the United Kingdom. A global semiconductor shortage is now affecting production plans for the current quarter, according to the company. Due to a shortage of chips, JLR temporarily suspended production at its two key factories in the United Kingdom last month.

Tata Motors posted a net loss of $1.04 billion for the quarter ended March 31, compared to analysts' estimates of a profit of $365.4 million.

Even though JLR's revenues in China increased by 127 percent year over year, and Tata Motors' total retail sales, which account for the majority of its revenue, increased by 12.4%.

JLR also said that its 'Project Charge' turnaround plan saved the company $426 million during the quarter.

The loss at Tata Motors was mainly due to 'exceptional products,' such as asset write-downs and restructuring costs.

Aside from that, the carmaker had a strong operating year, with strong sales growth thanks to an easing of Covid restrictions in India between October and March 2020.

However, the situation for most Indian auto giants is unlikely to improve in the coming months. Apart from supply chain disruptions and semiconductor shortages, the effects of the second wave of Covid-19, which hit India in April, could start to affect corporate earnings.

Beginning in April, major passenger vehicle manufacturers recorded a drop in monthly sales.

Consumer confidence has suffered as a result of the re-imposition of lockdown restrictions in many parts of the world, analysts claim, and consumers are delaying or canceling purchases of luxury goods such as new cars.

According to QuantEco Research, an independent research firm, unlike after the first phase, there could be little upside from pent-up market demand this time due to "higher out-of-pocket medical costs, and precautionary savings to mitigate any potential health crisis."

Add in the fact that rural demand is dwindling due to the virus's spread in the countryside and talk of a third wave on the way, and the sector could be in for a year in the slow lane.

Tata Motors, like other big automakers around the world, has been forced to halt some operations due to a chip shortage.

The coronavirus outbreak has prompted a move toward working, studying, and socializing from home, boosting demand for laptops and other semiconductor-based devices.

The shortage has forced the world's largest automakers to reduce production, including Toyota, Nissan, GM, and Ford.

Toyota revealed this week that development at two of its Japanese plants would be temporarily halted next month.

JLR made a similar change last month, announcing in a statement that "we have changed production schedules for some vehicles, which means our Castle Bromwich and Halewood manufacturing plants will be running a short duration of non-production from Monday 26th April."

The global automobile industry was still reeling from the pandemic's dramatic drop in sales and the difficulties of transitioning to electric vehicles.

Jaguar Land Rover revealed in February that its Jaguar brand will be all-electric by 2025 and that electric versions of its entire Jaguar and Land Rover lineup would be available by 2030.

Customers want high-performance electric cars with a luxury or performance feel, and carmakers are under pressure to meet strict carbon emission requirements in Europe and China.

Source: Cambodia Compass comprehensive arrangement

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