Jaguar Land Rover owner sees beginnings of recovery in China

Jaguar Land Rover’s Indian owner Tata Motors is seeing the beginnings of a recovery in China sales after the world’s second largest economy gradually opened for business following months of inactivity to check the spread of the coronavirus pandemic.

The success of JLR is crucial for owner Tata Motors Ltd., as the Indian company faces an unprecedented slump in sales in the domestic market, which started to slow down much before the virus outbreak destroyed demand. Tata Motors is “nothing" without its luxury unit as it generates as much as 74% of its revenue by selling Jaguar and Land Rover vehicles, brokerage CLSA said in a research report.

A recovery in China will bolster the Indian auto-maker in the second half of the year as the pandemic is crippling operations around the world. China’s economy contracted 6.8% in the first quarter but the world’s largest manufacturing hub saw demand reviving as factories reopened in late March after a strict lockdown that lasted for two months.

The coronavirus pandemic has crippled demand for automobiles worldwide with million of jobs at stake, and factories and suppliers at risk of shutting down. After struggling in China, and dealing with fallout from the ongoing uncertainty around Brexit, JLR started a 2.5 billion-pound ($3.2 billion) savings drive that includes cutting thousands of jobs worldwide.

Tata Motors bought the maker of the Jaguar XE sedan and Land Rover Discovery sport utility vehicle from Ford Motor Co. in 2008. JLR’s pretax loss for the quarter was 501 million pounds.

Shares of Tata Motors fell 4.6% to 100.50 rupees at the close in Mumbai.