Jaguar Land Rover's recent remarkable growth stalled in the last quarter as sales in China slipped.
The Midlands based firm said that it sold 114,905 vehicles in the quarter to the end of June, down just 0.6 per cent on the 115,596 in the same period a year ago.
Revenue fell 6.6 per cent to £5 billion but it was pre-tax profit and earnings before interest, tax, depreciation and amortisation (EBITDA) which took the biggest hit, with profit down over 30 per cent to £638 million and EBITDA down 24 per cent to £821 million.
The company blamed the slowdown in China for much of the decline, stating that it offset "strong" growth in the UK, Europe and North America.
JLR said the profit fall reflected a "weaker sales mix", meaning that the firm was selling more less-profitable models. Jaguar Land Rover's sales in China fell by a third to 21,920 vehicles during the period.
It also noted a strong performance in the same period last year.
"The financial performance in the quarter was lower than the strong corresponding quarter last year," the company said in a statement.
Economic conditions had become "more mixed" in China, the firm stated, yet it remained upbeat about future prospects.
"China will continue to be a growing market for premium vehicles," it said, noting that "increasingly affluent consumers [in China] … will aspire to owning luxury vehicles".
The news was not a great surprise. The profits slowdown was expected and shows, if anything, the bonanza in China is over and it is becoming like any other market.
Last year, China accounted for 20 per cent of JLR sales but maybe as much as 80 per cent of the firm's profits.
The stock market crash (the Shanghai Composite Index lost 14 per cent in July) and economic slowdown in China (economic growth is at its slowest for 25 years) are denting premium car sales after years of rapid growth.
And, as I've noted before, there is pressure on pricing as the Government looks at the prices firms charge.
In addition, the emergence of a second-hand market for cars has the effect of slowing the new car market.
According to China Association of Automobile Manufacturers (CAAM) figures, car sales in June fell 5.3 per cent from May.
CAAM had previously estimated that sales would grow by some seven per cent this year - it has now trimmed that figure to three per cent.
A number of international car manufacturers (including Peugeot Citroën and Ford) have warned of slower sales in China and Audi recently lowered its global sales forecast due to the Chinese slowdown.
Some industry experts suggest Chinese consumers are also delaying purchases because they expect luxury car prices to fall after an investigation by Chinese competition authorities.
China has been putting pressure on foreign car makers as seen in a £38 million fine on Mercedes Benz.
Global automakers, including BMW, General Motors and Ford, have cut prices on their Chinese models in recent months to combat weak sales growth.
JLR is doing likewise and stresses that this reflects market conditions and is not connected to competition regulation.
The price of the firm's Range Rover Evoque, made at its Chinese joint venture, will be cut by five to six per cent in China with immediate effect while the Jaguar XE will be cheaper from September.
These price changes will not apply in the rest of the world, though, where Jaguar Land Rover sales have been doing well.
Sales in continental Europe were up by 28 per cent, in the UK by 21 per cent and in North America by 13 per cent.
It's this strong performance in European and US markets and new models in the pipeline which indicate JLR has a good chance of continuing to grow despite the headwinds in China.
JLR chief executive Ralf Speth said: "We have delivered solid financial earnings in this quarter despite a challenging macro-economic environment, particularly in China.
"These results are a testament to our balanced market presence in five international regions.
"Demand for our premium vehicles remains encouraging, fully justifying our continued strategy of investing in world-class technologies, manufacturing facilities, skilled employees and services."
Strong JLR results have been propping up profits at Tata Motors, which bought the business from Ford for just £1.5 billion back in 2008.
That looks like one of the bargains of century thus far. Of late, Tata has been struggling with poor demand in India due to an economic slowdown (although a recovery in India and the launch of new models has seen Tata car sales rising in India of late).
In recent years, JLR has produced strong returns for Tata and, in its last full financial year, JLR had sales of £19.4 billion on 434,311 cars sold, making pre-tax profits of £2.5 billion.
Tata Motors' consolidated net profit fell to around £280 million in the last quarter from £547 million a year earlier.
The figure was lower than the £350 million forecast in a recent Thomson Reuters survey.
It was the fourth-straight drop in quarterly net profit for Tata Motors, even with JLR's strong performance until now.
Professor David Bailey works at the Aston Business School