Why are Tata Motors shares falling
"If DGCA gives a report that safety cannot be assured certainly we will take action. We can cancel their license," he said.
Shares of Tata Motors slumped in afternoon trading on the bourses on concerns of slowdown in the Chinese auto market. Luxury car makers like Mercedes are already offering huge discounts on high-end models, according to reports. China is the world’s second-largest luxury-auto market.
China has been the key growth market for Jaguar Land Rover. Nearly 85% of group EBITDA (earnings before interest, tax, depreciation and amortization) for Tata Motors in the third-quarter 2011-12 was generated by its UK subsidiary Jaguar Land Rover, Moody's said in a report.
At 1300 hours, shares of the company slumped over 3% to Rs 274.70 on the Bombay Stock Exchange (BSE). Tata Motors DVR, shares with differential voting rights, tanked nearly 5% to Rs 154.65. The BSE Sensex was up 22 points or 0.13% at 17,295.
Reports indicated that Mercedes Benz was offering 25% discount across segments in China while BMW AG 7-series, Audi AG A8Ls offered a 20% discount.
Analysts said Mercedes competes with Jagaur's passenger car segment and not with Land Rover. Jaguar contributes to less than 25-30% of Chinese volumes. Such discounts were offered earlier last year but volumes were not impacted, they added.