Tata Motors stock slumps as Jaguar Land Rover recalls vehicles with defects

MUMBAI: July 8 could go down as Black Wednesday for Tata Motors. Hit by subsidiary Jaguar Land Rover exposure to China and a recall of over 65,000 Range Rover vehicles from North America due to a manufacturing defect, the Indian auto giant stock fell 6 per cent to Rs 405.

With this, shareholders of Tata Motors have lost Rs 57,000 crore since it hit a peak of Rs 605 on February 3.

JLR has increased its market share in the Chinese luxury car segment from 4.5 per cent to 8.6 per cent in four years. China is a huge market where 1.8 million luxury cars (with price tag of $1 million and more) sell every year. The market has been growing in double-digits in the past four years.

But the Chinese government's restriction on discretionary spending, curb on new licences in top three cities and fire sale by auto makers ahead of new product launches impacted the market in the past one year.

Besides this, the pricing of ‘Evoque', JLR's, a popular model in China, did not work out. JLR may now go slow in the production of Evoque with sales coming down to 1,000 a month from a peak of 4,000 six months ago.

While a few days ago JLR cut prices by 5-11 per cent , it could be too little too late. Chinese consumers also suspected that the quality of the locally made Evoque was inferior than imported ones.

Mohit Arora, executive director at J.D. Power Asia Pacific, a research house in Singapore, said being one of the last entrants, JLR has been squeezed between a slowing market and aggressive stance adopted by German companies which doubled their efforts on products and network.

An email to JLR from ET, did not elicit any response.