JLR, which employs more than 4,000 people at Halewood in Merseyside, said Chinese consumers had held back on buying cars ahead of a big cut in import tariffs on July 1. Tony McDonough reports
Britain’s biggest carmaker Jaguar Land Rover (JLR) suffered pre-tax losses of £264m in the second quarter of this year – it first quarterly loss for three years.
JLR, which employs more than 4,000 people at Halewood in Merseyside assembling the Range Rover Evoque and the Discovery Sport, primarily blamed lower wholesale sales to China in the April/MayJune period. In the same period last year the company made a pre-tax profit of £595m.
China reduced import duties on new cars from 25% to 10% on July 1 and the company said consumers had held back on purchasing vehicles prior to the tariff cut. JLR has also been hit by what it calls a “demonisation of diesel” in the UK and the subsequent downtown in sales.
Revenues for the period were also down 6.7% to £5.2bn. However, the company said it actually sold 145,510 vehicles during the quarter – a year-on-year rise of 5.9%. Retail sales in the UK were up 3.3%.
JLR, which is owned by Indian conglomerate Tata, is continuing to invest in new vehicles, next-generation automotive technologies and facilities to support its future sustainable growth, with total investment spending of £1.1bn for the quarter.
It announced earlier this year that Halewood would receive a significant investment of £110m so it can produce the new Evoque model.
However, the company, which produces 530,000 vehicles in the UK every year, has also expressed concerns about the UK’s departure from the European Union saying a no-deal Brexit could cost it £1.2bn in lost profits every year.
Chief executive Ralf Speth said: “We had a pre-tax loss in the first quarter, reflecting the impact of the announcement of the duty reduction in China as well as planned dealer stock reductions in the quarter.
“We also continue to be impacted negatively by uncertainty over diesels in Europe along with Brexit and additional diesel taxes in UK. Given these issues, we will remain focused on driving growth and simultaneously reducing costs and boosting operational efficiency and capability, taking the necessary steps to shape our future.
“We expect sales and financial results to improve over the remainder of the financial year, driven by continued ramp-up of new models.”