JLR bucks Brexit uncertainties

JLR bucks Brexit uncertaintiesJaguar’s F-Pace SUV helps boost sales performance at Tata Motors unit

Tata Motors’ Jaguar Land Rover (JLR) unit posted 20% growth in 2016, defying the uncertainty that followed the Brexit vote, as sales for the year comfortably crossed the half-a-million mark.

In the 12 months ended December, JLR sold 583,313 cars, up 20% year-on-year. Jaguar made a strong showing with sales climbing 77%, boosted by demand for the F-Pace – the luxury marque’s first SUV – and the XE and XF. Growth at Land Rover was 8%, muted somewhat by the upcoming introduction of the new Land Rover Discovery this February.

JLR’s Group Sales Operations Director Andy Gross expressed confidence about the year ahead for the group, despite the persistent uncertainties around Brexit, which the auto sector has warned could hit the industry hard.

While the weak pound has supported British exports in recent months, should Britain fail to reach an agreement to maintain tariff-free access for its auto sector to the continent, it could hit both raw material costs and sales.

Last year, the president of U.K.’s Society of Motor Manufacturers and Traders urged the British government to stay in the single market and warned that EU tariffs on cars could add £2.7 billions to imports and £1.8 billion to exports. There would also be pressures on the U.K. market: the SMMT warned that while sales were strong in 2016, 2017 would be a challenging year, with the market’s strength resting on its “ability to maintain our current trading relations”.

While both markets are important to JLR (it sold 117,571 vehicles in the U.K. in 2016 and 138,695 in Europe) Ian Fletcher, Principal Analyst at IHS Automotive said the company remained well placed for 2017. “The F-Pace has delivered an exceptionally strong performance, and there is plenty more to come from it,” he said.

IHS Automotive forecasts JLR sales to rise 8% this year, and to reach sales of 800,000 units annually by 2021. “There is still plenty of momentum and new vehicle launches,” Mr. Fletcher said, pointing to the Land Rover Discovery and the expected broadening of the Range Rover portfolio. He said the diversification of its manufacturing base – the latest being a plant in Slovakia where the new Discovery is to be built from 2018 – and foothold in markets such as China and the U.S. would help offset any weakness in the U.K. and Europe.

JLR has also expressed concern about the impact of Brexit. In November, the BBC reported that CEO Ralf Speth had told an industry event that the company hoped to double output to 1 million cars but that its ability to do so would depend on government support, particularly around infrastructure and access to engineering talent.

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