Despite a spate of losses, Tata Group is committed to Jaguar Land Rover and the executive team that successfully turned the company around before.

Jaguar Land Rover (JLR) has suffered a series of quarterly losses, most recently £273 million ($351 million), reported in February. This was in addition to an asset write-down of £3.1 billion, which dealt a double-digit blow to the shares of its parent company, Tata Motors, the Indian conglomerate’s car-making arm. In the past year, its shares have fallen by 60%. Tata Motors relies heavily on JLR, which brings in about 80% of its sales and all of its profits. Yet Tata Group Chairman Natarajan Chandrasekaran is confident that JLR’s fortunes can be reversed.

Tata acquired JLR from U.S. carmaker Ford in 2008, when it was on the brink of bankruptcy. It was not beyond saving. In 2010, the company appointed a new CEO, former BMW executive Ralf Speth, to set JLR on the road to catching up with its German rivals. In just under a decade sales tripled, and profits were healthy. This may have made Speth a bit overconfident. Many say that Speth and his executive team went too far by pushing to sell one million cars a year to help fund future technology development, and spent too freely, driving up costs.

The company’s high ambitions came to a halt in 2018, as global sales volumes fell by 5% in the 12 months to December. JLR was hit hardest in its best market, China, due to the country’s slowing economy. This, as well as global issues such as Brexit and America’s trade wars with China, are beyond JLR’s control. But within its own sphere of influence, there have been missteps. For example, dealer relations in China soured as JLR’s tough sales targets forced them to sell cars at a loss. JLR also became over-reliant on increasingly unpopular diesel engines.

JLR’s growth efforts have also put it in a position of spending too much to make too many models for a carmaker of its size, according to The Economist. Its myriad brands have been a series of hits and misses: Range Rovers are popular and the Evoque has been successful, but Discovery and Velar have not. Neither has Jaguar in recent years.

And yet, Tata remains committed to the automotive executives credited with pulling JLR out of the depths to make it the fourth-largest luxury car brand in the world. In undertaking its next turnaround, the company plans to cut costs by £2.5 billion ($3.2 billion) over the next 18 months, along with thousands of jobs. Tata reckons these moves will turn its cash flow positive by 2020-21.

The Indian conglomerate believes that JLR is an essentially good business, in the hands of a highly capable and experienced team of automotive executives. In particular it is entrusting the company with the development of new automotive technology. Some of its models may need to be reconsidered, but its Range Rover continues to be one of the most profitable brands in the business. It may have a bumpy road ahead, but JLR likely has the strength to make it through.

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