After posting its second consecutive annual loss, in FY20, Tata Motors-controlled Jaguar Land Rover will be further challenged by economic uncertainties this year stressing a greater need to ‘work with partners’, N Chandrasekaran, Chairman, Tata Sons said in the JLR annual report.
“The new fiscal year will be marked by further uncertainty, reflecting the varying pace of economic recovery in different regions. This will require a continued focus on financial discipline and further efficiencies, building on the considerable success of Jaguar Land Rover’s Charge+ and Accelerate programmes”, said Chandrasekaran.
Economic challenges, heightened competition and the COVID-19 impact hit JLR dearly, especially in China which is one of its biggest markets. Wholesale volumes of the UK–based luxury brands hit a six-year low in FY20 at 525,402 units.
JLR reported GBP 469 million loss in FY20 which was only dwarfed by the massive GBP 3.32 billion loss in FY19. To prepare for the future JLR is taking the route of partnerships in areas such as driverless cars and electric mobility.
JLR is working with US-based Waymo to develop and pilot self-driving technologies, and with German rival BMW to develop next-generation electric drive units to power its future battery-driven vehicles. The manufacturing of EDUs will begin at the JLR engine manufacturing centre in Wolverhampton later this year.
Under the Charge+ program the two brands claimed to have achieved GBP 600 million savings in Q4 FY20 even as a new cost improvement target of over GBP 2 billion has been set by March 2021.
“I am equally confident that Jaguar Land Rover will play a central part in the automotive industry’s shift to an increasingly autonomous, connected, electrified and shared mobility world. At the same time, we will prioritise simplification, synergies and scale within the Tata Motors family, including working with partners when it makes sense to do so”, added Chandrasekaran.
COVID-19 and Brexit are two of the several challenges before JLR this year. The outbreak of COVID-19 significantly impacted JLR financial results in Q4FY20. Jaguar Land Rover enacted temporary plant shutdowns in Q1FY21 with the restart of production at most of its plants from mid-May and through June 2020.
The company’s supply chain has been disrupted by the pandemic, however, its supply base operations are gradually returning and are supporting the restart of operations.
A fifth of JLR’s retail sales in FY20 were in Europe and it continued to rely significantly on its supplier base in the EU, which accounts for 45 percent of the content of its vehicles.
“The UK formally exited the EU on 31 January 2020 with a transition period to facilitate an orderly withdrawal ending on 31 December 2020. Uncertainty remains over the future terms of trade at the end of the transition period meaning we could be subject to WTO tariffs from January 2021. These additional costs pose an unnecessary risk to the business at a time when we have experienced unprecedented disruption caused by COVID-19”, JLR said in its analysis.
“In the year ahead, we must seize every opportunity while addressing the ongoing industry challenges that confront us. These challenges include preparing for Britain’s withdrawal from the European single market at the end of the Brexit transition period, albeit with little clarity yet on the shape of future trading arrangements”, added Chandrasekaran.
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