New Delhi/New York: The Indian conglomerate that owns Jaguar Land Rover said dealing with tariffs is the “new normal” for the global auto industry and that negotiations around Britain’s exit from the European Union have taken too long.
“Sometimes it’s better to have clarity than a desirable result,” Natarajan Chandrasekaran, chairman of Tata Sons Ltd., which owns the British luxury brands, told Bloomberg Television. “Nations are getting more protective and this is going to be the new normal.”
Tata, which oversees companies including Tata Motors Ltd. and Tata Steel Ltd., bought the maker of the Jaguar XE sedan and Land Rover Discovery sport utility vehicle from Ford Motor Co. in 2008. After turning it into a cash cow with booming sales in countries like Russia and China, JLR waned to such an extent that it’s had to launch a 2.5 billion-pound ($3.2 billion) savings program and slash thousands of jobs worldwide.
Losses have mounted with a slump in India’s car market and trouble overseas, including an economic slowdown in China and uncertainty over Brexit. JLR is closing its U.K. factories for a week in November to guard against disruption to supply chains from a possible no-deal Brexit. Tata has said business is stabilizing in China, though official data show overall auto sales in the country are sliding.
Chandrasekaran said JLR’s sales in China have “collapsed” last year. While largely blaming an industry-wide slump, he said some problems were self-inflicted, including vehicle quality and dealer-relation issues. He expects to see sales come back.
Analysts at Sanford C. Bernstein last month described JLR as “severely challenged” and said Tata Motors should look at BMW AG as a buyer because the German company is “awash with cash.” Tata has previously denied reports it is looking at strategic options for JLR, including a possible stake sale.
Chandrasekaran said he would seek more technical partnerships to help Tata Motors transition to electric and autonomous vehicles, but he has no interest in selling the company.
“Auto is a core business for us,” he said. “We don’t want to do partnerships where we just sell a stake and we have no say. We are not financial investors.”
JLR’s capital expenditures have outpaced operating cash flow over the past two years, but Chandrasekaran said his target is to reverse that trend by 2021. “Once we do that, then people will believe what I’m saying: I’m not running away.” – Bloomberg