Tough road ahead for Tata Motors with JLRs margins declining and expenses rising
Jaguar Land Rover has seen a decline in its EBITDA margin, while its expenses had increased significantly over the last two years, which is a cause for concern for parent company, Tata Motors.
Key highlights:
- JLR’s margin deterioration was caused by adverse product mix, warranty cost and incentives, rising capital expenditure, etc.
- JLR’s EBITDA margin declined by 200 basis points YoY to 12% in FY17
- JLR has seen an increase in expenses in comparison to revenues over 2 years
It seems to be tough road ahead for Tata Motors due to Jaguar Land Rovers (JLR). According to an Ambit Capital research report, JLR’s margin deterioration was caused by adverse product mix, warranty cost and incentives, rising capital expenditure, research and development (R&D) spends and aggressive R&D capitalisation of 79% versus 38% for peers.
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