Jaguar Land Rover (JLR) owner Tata Motors has announced a shock quarterly loss of more than $1bn (£700m).
It came as the Indian company wrote off $2.1bn related to its revamp of the UK-based luxury car business.
It also warned that a global semiconductor shortage is now impacting production plans for the current quarter.
Last month JLR temporarily halted production at its two main factories in Britain due to a lack of chips.
For the quarter that ended on 31 March, Tata Motors reported a net loss of $1.04bn, compared to analysts' expectations of a $365.4m profit.
That was even as JLR's sales in China jumped by 127% from a year ago and Tata Motors' overall retail sales, which account for most of its revenue, rose 12.4%.
The company also said that JLR had saved around $426m during the quarter under its 'Project Charge' turnaround plan.
'Bracing for the slow lane'
Nikhil Inamdar, BBC business correspondent
Tata Motors' loss was largely on account of 'exceptional items' - asset write-downs and restructuring costs.
Otherwise, it was an operationally strong performance for the carmaker with good revenue growth on account of an easing of Covid restrictions in India between October and March 2020.
But the situation is unlikely to remain favourable for most Indian auto giants in the months ahead. Besides supply chain disruptions and semiconductor shortages flagged by Tata Motors, the impact of the intense second wave of Covid-19 that hit India in April, could begin impacting on corporate earnings.
Major passenger vehicle makers posted a decline in monthly sales numbers starting April.
With several parts of the country re-imposing lockdown restrictions, consumer sentiment has taken a hit, and buyers are delaying or cancelling purchases of discretionary items like new cars, say experts.
Also, unlike after the first wave, there could be a limited upside from pent-up consumer demand this time, due to "higher out of pocket medical expenses, and precautionary savings to avert any health crisis in the future," according to QuantEco Research, an independent research house.
Top that with rural demand losing steam due to a spread of the virus in the countryside, and talk of an impending third wave and the sector could well have to brace for a year in the slow lane.
Chip shortage woes
Like other major carmakers around the world, Tata Motors has been forced to suspend some operations because of the chip shortage.
The coronavirus crisis has driven a shift to working, learning and socialising from home, which has boosted demand for laptops and other devices that use semiconductors.
The shortage has forced the world's biggest carmakers, including Toyota, Nissan, General Motors and Ford, to cut production.
This week, Toyota announced that it would temporarily stop production at two of its plants in Japan next month.
Last month, JLR made a similar move, saying in a statement: "We have adjusted production schedules for certain vehicles which means that our Castle Bromwich and Halewood manufacturing plants will be operating a limited period of non-production from Monday 26th April".
The global motor industry was already reeling from the sharp downturn in sales caused by the pandemic and the challenges of switching to electric-powered vehicles.
In February, Jaguar Land Rover announced that its Jaguar brand would be all-electric by 2025 and that it will launch electric models of its entire Jaguar and Land Rover line-up by 2030.
Carmakers are under pressure to meet stringent carbon emission demands in Europe and China, as well as customer demand for high-performance electric cars with a luxury or performance feel.