Tata Motors expects strong H2 for JLR, confident of meeting sales, EBIT target

After a weak performance in the first half of the current financial year, Tata Motors Ltd expects a strong second half for Jaguar Land Rover and has reaffirmed the full financial year revenue and EBIT margin targets of the British luxury car maker.

Jaguar Land Rover saw its revenue remain flat at £13.7 billion in the first half, with a 5.6% on-year decline in its second quarter to £6.5 billion. The EBIT margin also contracted by 90 basis points to 7.1%, with metrics dropping to 5.1% in the second quarter.

Despite this weakness, Tata Motors’ Group Chief Financial Officer PB Balaji said that the company is holding to the earlier full-year guidance for Jaguar Land Rover. It has set a target of £30 billion in revenue with an EBIT margin of at least 8.5%. 

The weakness in the first half comes as the Jaguar Land Rover wholesale volumes declined close to 3%. The volumes plunged 10% on year in the second quarter. This reflects the supply chain constraints experienced during the period.

“We are holding (on) to our guidance…We are planning for a sharp improvement in Jaguar Land Rover because the supply issues have now eased, and some vehicles were on hold due to minor quality issues, that have also been resolved,” Balaji said while speaking to reporters on Friday, November 8, 2024.

The targets for the financial year 2025 are part of the company’s broader strategy to push the luxury brand with a vision of £38 billion in revenue and 15% EBIT margin in the long term.

He believes that Jaguar Land Rover products are very aspirational and are garnering demand. Limited inventory situation and controlled supply at the current pricing can ensure strong improvement in the margins, he added. 

The British automaker expects to remain net cash positive this year with a free cash flow of £1.8 billion, which it eventually wants to take up to £3 billion. In FY24, the company had a free cash flow of £2.3 billion.

Jaguar Land Rover has also laid out a five-year investment plan for £18 billion (Rs 1.9 lakh crore) with a significant part going into product development. It's Reimagine strategy aims to reposition the company as an electric-first, modern luxury carmaker by 2030.

Jaguar Land Rover has three architectures - MLA for ICE, PHEV and BEVs, Electrified Modular Architecture (EMA) and Jaguar Electrified Architecture (JEA) solely for BEVs. 

The company has been pushing India sales recently, with plans to increase localization as it looks at thee country as a critical manufacturing hub amid ongoing India-UK Free Trade Agreement talks. The brand recently localized the assembly of Range Rover and Range Rover Sport.

Tata Motors is also setting up a new manufacturing plant in Tamil Nadu that is expected to be operational before 2032. The plant will manufacture both ICE and electric vehicles for not only Tata Motors but also Jaguar Land Rover. Currently, JLR has a facility in Pune that assembles imported CKD units of Range Rover Velar, Range Rover Sport, Evoque, Jaguar F-PACE, and Land Rover Discovery Sport.