Jaguar Land Rover parent company Tata Motors, wants to separate its passenger car business from trucks and buses, seeking a partner as sales in India have slumped for a 16th consecutive month in February.
By creating a separate subsidiary for its Passenger Vehicles (including EVs), Tata hopes to provide the unit with “differentiated focus”, helping it realize its full potential.
“The recent outbreak of COVID-19 increases the challenges faced by the business,” said the company in a statement. “A move towards subsidiarization of the PV business is the first step in securing mutually beneficial strategic alliances that provide access to products, architectures, powertrains, new age technologies and capital.”
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The subsidiary shift will be implemented through a scheme of arrangement, tabled for approval to the TML Board over the next few weeks. Tata expects the entire transfer process to take less than 12 months, which includes regulatory and statutory approval, as well as the approval of shareholders and creditors.
Tata offers a wide variety of small and mid-size trucks
According to Moody’s Investor Service, Tata Motors’ credit rating is under review for a downgrade, especially with customer demand being as low as it is thanks to the ongoing pandemic. Bringing on an investor could help the Indian brand revive sales.
“It is something Tata should have done many years ago,” said Ashvin Chotai, managing director, Intelligence Automotive Asia. “I would have thought Tata would have more fundamental challenges to address in the current environment than to this reorganization.”
As for JLR, back in January, the British premium carmaker had to give up on plans to issue a U.S. dollar bond after investors demanded too high an interest rate to compensate for the risk posed by the coronavirus situation, as per Bloomberg News.
