Tata Motors gained 2.17 percent, recovering from a fall of 3.47 percent in the previous session after Reuters reported unit Jaguar Land Rover’s annual profit could be cut by 1 billion pounds if Britain left the 28-member trading bloc.
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Chief Executive Officer of Jaguar Land Rover Dr Ralf Speth, in a letter to the staff of JLR, said that they would be a stronger company and a stronger nation, if Britain remains withnin the EU.
According to people familiar with Tata Motors plans for Europe, there may not be any immediate changes, but the company is, however, bracing for higher trade tariffs once Britain exits the EU, since this will make JLR less competitive compared to European rivals such as Mercedes Benz and BMW. Its exit would significantly dilute the relevance of EU FTA for us.
The company made a 2015/16 pre-tax profit of 1.6 billion pounds.
“Among original equipment manufacturers, the key impact of Brexit will be felt on Tata Motors”, IDBI Capital wrote in a note to investors.
The analysis expects the 1 billion pounds hit to come from a 10 per cent levy on vehicles being exported to Europe and 4 per cent on imports of components for the production of vehicles, the newspaper said.
In a historic development, the United Kingdom has voted to leave the European Union after 43 years as the “Brexit” camp today took a seemingly unassailable lead over the “Remain” camp in a down-to-wire referendum with far reaching implications for the world.
The work, which has been updated several times since it was first prepared for the board with input from the company’s sales, marketing and tax departments last summer, features three other scenarios, including Britain remaining in the single market, the second source said.
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The Coventry-based carmaker has canvassed setting up a new office on the Continent if the United Kingdom votes Leave, possibly in Brussels or in Luxembourg.
