(Reuters) - Fitch Ratings said on Tuesday it has placed the credit ratings of Britain’s biggest carmaker Jaguar Land Rover under review for possible downgrades, citing increasing risks of a disorderly Brexit.
Jaguar Land Rover, owned by India’s Tata Motors Ltd, had said in January that there would be a week-long pause in production in April due to potential disruption from Brexit and trimmed production.
“The group has a significant trade imbalance and production bias to the UK and could be significantly affected by trade barriers and various logistic issues,” the credit rating agency said, placing JLR’s long-term ratings and senior obligations at ‘BB’ on “Watch Negative”.
Fitch said the review was prompted by uncertainty ahead of Brexit, which could lead to lower sales and higher costs that could strain the company’s liquidity position.
Prime Minister Theresa May’s Brexit deal was rejected in parliament last month and the government is trying to make changes to win the support of lawmakers even as the divorce date for Britain’s departure from the European Union looms less than two months away.
JLR, based in central England, is also planning to prune its workforce as it battles to return to profitability amid lower Chinese demand and a slump in European diesel sales.
Reporting by Karina Dsouza in Bengaluru; Editing by Arun Koyyur