Jaguar Land Rover profits down but not out

Jaguar Land Rover blames the cost of research, development and new model launches for its 25 percent fall in pre-tax profits

With third-quarter numbers being posted over the past 24 hours, Coventry-based automotive icon Jaguar Land Rover claims that – despite global vehicle sales rising to a respective 154,447 during the last quarter of 2017 – pre-tax profits dipped to £192m from £225m over the previous year’s comparable period. However, revenues rose by 4.3 percent during the quarter, to £6.3billion – which is more than impressive given the difficult circumstances within the automotive market over the past 12 months.

Ralf Speth, Jaguar Land Rover’s chief executive, highlighted the turbulent forces within the industry, calling the finance figures ‘credible in a challenging period’. He told The Telegraph that the manufacturer ‘continued to over-proportionally invest in long-term growth and autonomous, connected and electric technologies’.

Little over 14 days ago it emerged that JLR was cutting a shift at the Halewood plant – the lines responsible for production of the Discovery Sport and Range Rover Evoque. No jobs are set to be lost, however, and the new factory in Slovakia is still going ahead.

Recent JLR launches have seen the Jaguar E-Pace and Range Rover Velar joining the ranks, alongside an all-electric classic E-type, as Jaguar gears up to produce its first fully electric production model; the I-Pace.

Diesel tax

In 2016, ministers announced the outlaw of sales of brand-new conventionally engined cars by 2040. This was followed in last November’s budget by an extra tax on the sale of new diesels, brought about through disputable pollution concerns – mainly focused on London city centre. As nearly 80 percent of domestic purchases employ diesel power, the moves have seen a slowing of sales amid confusion about the Government’s fuel policy and taxation surrounding the Volkswagen-inspired ‘dieselgate’ scandal.

A drop in new diesel Land Rover sales can also be attributed to this, with official statistics showing a 26 percent decline. These factors have resulted in Land Rover easing one-third of its production lines within the UK.

Brexit vs Jaguar Land Rover

Brexit also comes into play, with the predicted oncoming slaughter of business rates keeping customers away from financial commitments and outright purchase during the uncertain economic climate.

During this quarter, amid the unveiling and announcement of exciting new models, JLR claims to have delivered a profit margin of 10.9 percent on an ‘earnings before tax, interest and depreciation’ basis. This makes for an 80 basis point improvement over the previous 12 months, even if it’s down on 2016 by 14.4 percent.

However, deliveries to North America have slumped by 2.4 percent, with a further 3.4 percent drop on the European continent. Sales in Australasia and China remain strong, though.

Where have these figures come from?

These financial results have been released alongside figures for the same time period from Tata Motors’, JLR’s Indian parent company.

Despite the figures dropping in comparison with previous years, sales for Jaguar Land Rover remain strong in a hugely competitive market. Alongside the profits posted by the Morgan Motor Company, the future for JLR appears to be bright.

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