Jaguar Land Rover to launch new models, do a few upgrades by FY23

Photo: JLR Website
Jaguar Land Rover (JLR)  Automotive, the UK subsidiary of Tata Motors, plans to fire on all cylinders as it braces to steer profitably amid disruptive technologies, regulatory and geopolitical changes, apart from heightening competition.

The maker of Jaguar luxury sedans and Land Rover sport utility vehicles plans to introduce three new nameplates by 2022-23, a flurry of upgraded models and to develop a fully flexible platform to be “future ready”, the company told investors on Friday.

The Birmingham-based entity will be pumping in £4.5 billion annually from FY19 to FY21 for this. A platform with ‘modular longitudinal architecture’ is expected to be ready by 2025. This is aimed to offer the flexibility to turn out models that run on conventional petrol and diesel engines, as well as hybrid or battery-operated full electric ones. 

The move will be a continuation of the strategy as part of which JLR plans to have all its new products electrified by 2020. About five per cent of its global sales will come from a mix of fully electric and hybrid vehicles in the near term and this is expected to increase to 20 per cent in the medium term.The contribution of petrol-powered cars (including mild hybrid cars) are expected to come down to 50 per cent in the medium term from 60 per cent expected in the near term, and diesel-powered vehicles (including mild hybrid cars) to 30 per cent from 35 per cent.

Triggered by Volkswagen’s emissions scandal in 2015, European vehicle makers have been gearing up for tougher emission standards and strategies to cut dependence on conventional petrol and diesel engines, beside making investment in electric and other alternative powertrain technologies. European electric vehicle sales, now about 1.5 per cent of all new registrations on the continent, will rise to about five per cent in 2021 and take off from 2025, says Bloomberg New Energy Finance.

Amid higher taxation on diesel cars in Europe and uncertainty owing to Britian’s exit from the European Union, JLR has seen sales soften and margins reduce to 10.8 per cent in FY18 from 12.1 per cent in FY17. Retail sales growth remained muted at 614,309 units in FY18, from 604,009 units the previous year.

Faced with multiple challenges in its key markets, JLR has pared volume growth plans in the near term. To reflect the new realities, it has downgraded its long-term Ebit (earnings before interest and taxes) margin to seven to nine per cent, from its initial expectation of 8-10 per cent announced a quarter earlier.

JLR has also set up a facility in Slovakia. With initial capacity to make 150,000 units annually, the plant will go on stream by end-December. The move to shift production there of its Land Rover Discovery will free up capacity at its UK plant, the company said.

“If the company retains the benefit of lower cost of production in the Slovakia plant, it could boost the Operating earnings margin by 40-50 basis points in FY20,” wrote analyst Hitesh Goel in a May 24 report.

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