Jaguar Land Rover Remains Solidly Profitable, Despite Heavy Investment
There’s been a lot of positive changes around Jaguar Land Rover in the last decade or so. Since being purchased from Ford for £1.5 billion by Indian conglomerate Tata back in 2008, they’ve invested more than £11 billion in R&D, new models, and new plants. But while many of those investments have already started to pay dividends — particularly with the new Jaguar XE and F-Pace models — they’re still reflected in JLR’s latest quarterly results, which show rising revenues and declining earnings.
Since the end of June, JLR sold 132,742 vehicles, a 16% gain over the same period last year. This in turn caused revenues to go up by 9.2% to £5.45 billion. Yet profit before tax fell from £638 million to £399 million, which decreased the profit margin 4.1% to 12.3%.
According to The Telegraph, part of the reason for that is that the best-selling models tend to be cheaper, and therefore have smaller profit margins. Profitability has also been affected by the dip in the Chinese market, though that seems to be recovering now.
“However, what has changed out there is the government’s crackdown on pricing of premium models. The demand is strong in China but it will not be the bonanza market it once was as it normalises,” says Professor David Bailey, an industry analyst from Aston University.
But let’s keep focusing on the good, shall we? Thanks in no small part to these much-needed new models, Jaguar sales are up a whopping 76% over last year’s corresponding quarter. And though the F-Pace was built in order to reduce JLR’s reliance on Land Rover, they still sold more than 100,000 units of the old beast, the first time that’s ever happened.
And it’s not like investment is going to stop anytime soon, as JLR is planning on building a new factory in Slovakia.
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Via [The Telegraph]