THE coronavirus outbreak has hit Jaguar Land Rover’s (JLR) retail sales in China, and it is expected to lower the profit of Britain’s largest carmaker, Tata Motors said on Friday (6).
JLR’s parent company said the outbreak has hit JLR’s retail sales in the Asian country and is likely to lower the luxury carmaker’s full year earnings before interest and tax (EBIT) margin.
The Indian auto giant said in a statement: “Recognising that the present situation is highly uncertain and could change, the reduction in China sales resulting from the coronavirus presently is estimated to reduce Jaguar Land Rover’s full year EBIT margin by about one per cent.
“However, free cashflow in Q4 is still expected to be modestly positive and JLR has £5.8 billion of total liquidity by December 2019 (£3.9b of cash and a £1.9bn undrawn revolving credit facility)”.
The coronavirus epidemic, which started in China and is spreading globally, has hurt sales in the world’s largest auto market.
JLR sales in China grew on average about 25 per cent year on year for the six months from July through December 2019 and it continued to see strong growth for the first three weeks of 2020.
The coronavirus has significantly impacted China sales with February retails down around 85 per cent against the prior year.
In the first half of the month, about 20 per cent of dealers were open which has since improved to now over 80 per cent although most are still operating with reduced staffing and facilities.
JLR expects this to improve over the course of March; however, retail sales are expected to recover more gradually.
The spread of the virus to other markets such as South Korea, Japan, and Italy will also impact sales in those markets.
Commenting on the auto parts supply in China amid coronavirus outbreak, JLR added: “…In the event of specific parts shortages in China, JLR would ordinarily be able to still build cars and retrofit missing parts when available; however, we cannot rule out the risk that a shortage of a critical component could impact production at some point. The spread of the virus to South Korea, Japan, and northern Italy is creating similar issues, which we are managing in the same way.”
JLR’s supply chain is primarily based in Europe and the UK, with a relatively small percentage of direct parts coming from China.
