Luxury carmaker Jaguar Land Rover has suffered a dramatic financial blow, with profits nearly halving after a slump in sales and punishing US trade tariffs. The Tata-owned group reported a 49.4% plunge in underlying pre-tax profits to £351 million in its first quarter to the end of June.
The company's revenues dropped 9.2% to £6.6 billion, following a temporary pause in exports to the US and the planned wind-down of older Jaguar models. The group is preparing for the launch of new electric ranges in 2026.
US tariffs hit profits hard
JLR said US tariffs had a "direct and material impact on profitability and cash flow in the period". However, the company added that the "US-UK trade deal will significantly reduce the financial impact of US tariffs going forward".
The challenging financial results come as the group announced plans to axe up to 500 management jobs in the UK last month. The cuts will impact 1.5% of its UK workforce of more than 33,000, with the jobs going as part of a voluntary redundancy programme for managers.
CEO cites challenging conditions
JLR chief executive Adrian Mardell said the results come amid "challenging global economic conditions". He added: "We are grateful to the UK and US governments for delivering at speed the new UK-US trade deal, which will lessen the significant US tariff impact in subsequent quarters, as will, in due course, the EU-US trade deal announced on July 27."
It has been a challenging time for the group, with its recent rebranding and advertising strategy attracting controversy. Mardell also announced plans to retire in November after three years at the helm and 35 years with the company.
Trade deals offer relief
He will be replaced by PB Balaji, group financial officer of Tata Motors. JLR halted new shipments to the US in April but restarted exports in early May amid hopes that a trade deal for the sector would be struck.
The car firm saw wholesale sales in North America drop by 12.2% year-on-year in the quarter after the pause. The group has since welcomed trade deals with the US, which reduced tariffs on UK-made vehicles exported to America from 27.5% to 10% from June 30.
Further tariff reductions ahead
An EU-US trade deal was also announced on July 27, which will reduce the tariffs on JLR's vehicles made in the EU and exported to the US from 27.5% to 15%. These agreements are expected to provide significant relief for the luxury carmaker's future operations.
(PA) Note: This article has been edited with the help of Artificial Intelligence.
