Fitch raises concerns over post-Brexit supply chains

Fitch Ratings has placed Tata Motors Limited on “Rating Watch Negative” due to the “increasing risks of a disorderly Brexit”, according to a statement issued by the ratings agency. It has singled out Tata because the group’s fully
owned Jaguar Land Rover (JLR) subsidiary accounts for a significant share of Tata’s profits. With its manufacturing base in Britain JLR faces greater risks than other manufacturers such as Fiat Chrysler and Peugeot, both of
which have plants outside of Britain. “Trade barriers and logistics issues arising upon a disorderly Brexit could have an impact on JLR’s competitive positioning, and lead to significantly lower sales and profitability
and higher working-capital needs. “JLR sells about 20% of its vehicles in both continental Europe and the US, but manufactures them quasiexclusively in the UK. “This exposes it to increased tariffs and supply
chain disruptions from a disorderly Brexit, which could undermine its competitive positioning and affect cash generation,” states Fitch. It will make a decision on the downgrading of JLR after there is more certainty about Brexit.