In the face of drastic changes in the automotive world, Tata Motors have announced that they are open to partnerships for Jaguar Land Rover to share capital expenditure.
Drastic changes are undertaking in the automotive world with automakers having to make the shift towards electric mobility and other future technologies. In the wake of such developments, the weight of Jaguar land Rover on Tata Motors is perhaps becoming a little too much. In the 74th Annual General Meeting of Tata Motors, the company has announced that they are open to partnership for Jaguar Land Rover.
Tata Motors chairman, N Chandrasekaran, at the 74th AGN said, “Like any other auto company, JLR has to invest in future technologies to address the move away from ICE to hybrid and electric. It also has to invest in future models, make necessary investments in areas like shared mobility, and also beyond that. That’s very important to stay alive in this ecosystem. All this means is there is a need for capital investment if you want to be future-ready,”
He further added that, “The only way to handle this need for capex is additional investment through partnerships, because we want to spread the investment. There are many discussions underway, from tactical to strategic.”
Over the past 12-18 months, capital expenditure on Jaguar Land Rover has been reduced from around £4.5 billion (Rs 34,483 crore) to £3.98 billion (Rs 30,499 crore) in the previous year as was disclosed by Chandrasekaran. He also said that there are plans to make further reductions but nothing that would be too drastic.
As for potential partnership themselves, Chandrasekaran said “These opportunities keep coming and we keep evaluating every one of these opportunities and as long as it is in the interest of Tata Motors, we will forge such partnerships so that we are able to address the capex.” The company is thus looking for new connections with some established automotive player or even start-ups for that matter. Such a practice is a fairly common act in the automotive world as has been exemplified by the Daimler and BMW groups. There were also talks about Tata joining hands with the PSA Group, but Tata Motors have denied the news.
Jaguar Land Rover has been incurring quite some losses in the international market. Sales for JLR have been plummeting down with a shift in demand for petrol and a massive drop in demand of about 40% – 50% in China, which was one of their main markets. In Q1FY2020, Tata Motors have incurred a net loss of Rs 3,680 crore, of which Rs 3,451 crore loss has come from Jaguar Land Rover alone.
However, sales in China has improved over the last couple of months and Chandrasekaran said “For the first time in 12 months, we are seeing a positive volume growth in China in July. Last month it recovered and this month it looks good. But we need to wait for a couple of more months to see whether there’s a trend,” .