Investors in bonds in India’s Tata Motors Ltd., frightful over the fallout of the recessing Chinese sales on the overall company finances have been relieved to find the British subsidiary Jaguar Land Rover once again comes to the rescue.
According to data provider CMA, Tata Motors’ bond risk surge has been reversed by the rising US sales of the Jaguar Land Rover unit, with the cost of insuring the debt against non-payment down 30 percent this month after soaring 92 basis points during the previous two months. The Indian automaker has come to depend for 83 percent of its revenue on UK subsidiary JLR, which reported US sales jumped 61 percent in September thanks mainly to the Land Rover SUV brand luring more buyers. This could prop the impact of the market slowdown in China, the world’s largest auto market, which has affected Tata’s profit over the past four consecutive quarters and prompted a Standard & Poor’s revision of the group’s outlook from positive to stable last month.
Easily affordable credit, Labor Day holiday promotions and stable, relatively low priced gasoline have triggered increased American spending, with buyers directing their attention on their wide array of pickups, SUVs and crossovers. While JLR’s US sales of 6,850 units were mostly due to the stellar performance of the Land Rover brand, Joe Eberhardt, its chief executive officer for North America, added the Jaguar peer would also deliver its dues as deliveries will increase thanks to the introduction of the refreshed XF sedan and upcoming upgrades to models next year.