You are here
Jaguar counts on China recovery to bolster return to profit
[MUMBAI] Jaguar Land Rover Automotive Plc expects a turnaround in China in the coming months to shore up efforts that have delivered the first profit in four quarters for Britain's largest automaker.
The luxury manufacturer reported net income of 119 million pounds (S$208.7 million) in the three months ended March, an improvement from the record 3.1 billion-pound loss posted at the end of 2018 that shocked investors and spilled over to JLR's Indian parent Tata Motors Ltd.
While the latest results are encouraging for JLR, its struggles in China have persisted with sales tumbling 46 per cent in April, amid a 17 per cent market pullback, to raise questions as to how long Tata will hang on to what was once its crown jewel. Tata Group is exploring strategic options for the luxury brand, including a potential stake sale, people familiar with the matter have said.
China should return to growth "a quarter from now," Tata Motors' Chief Financial Officer P.B. Balaji told reporters in Mumbai on Monday, reiterating the Indian company wasn't looking to sell its luxury cars unit. Jaguar Land Rover has "managed to stabilize" in China after removing surplus inventory.
Though JLR is hardly the only carmaker suffering in China lately amid the market's longest slump in a generation, other luxury brands like Mercedes-Benz and BMW have managed to grow sales. The Chinese government taking steps to bolster auto demand should help boost sales, Balaji said, while profitability at JLR's dealers in China has started to stabilize.
The manufacturer, which announced 4,500 job cuts globally in January as part of a 2.5 billion-pound savings program, is particularly vulnerable to the shift away from combustion and diesel engines, and its strong historic links to the UK have fueled concern over what a disruptive Brexit could bring. The cost-cutting drive has yielded 1.25 billion in savings so far, JLR said.
Separately, JLR's Chief Financial Officer Ken Gregor will step down after 11 years in the post to be replaced by current Chief Transformation Officer Adrian Mardell, the carmaker said.
The maker of the Jaguar XE sedan and the Land Rover Discovery SUV has also been struggling with quality problems at both marques: A J.D. Power survey of 31 brands in June 2018 put them in the bottom two slots. Jaguar had 148 problems per 100 vehicles and Land Rover racked up a dizzying 160. Top-ranked Genesis, the luxury brand of Hyundai Motor Co., had 68.
Land Rover still ranks as the most valuable of the major brands owned by Tata Group, which also controls Tetley tea and New York's luxury Pierre hotel. The automotive marque was worth an estimated US$6.2 billion last year, according to Interbrand.