Jaguar Land Rover will lose 500 million pounds due to Brexit

Jaguar Land Rover will lose 500 million pounds due to Brexit

May 22, 2020 0 By autotimesnews

The British firm will pay a huge amount if Britain leaves Europe without a deal.

Jaguar Land Rover’s chief financial officer admitted that if the UK “leaves the EU” without a deal, it will cost the company £ 500 million a year for tariffs on import parts only.

During a meeting between Adrian Mardell and investment banks at the end of January, he said that he “fully expects” that the current transition period will last until January 1, 2021, after which there will be “other relations.”

“We already examined two versions of potential accidents, at the end of March [2019] and at the end of October, and we did to protect ourselves by closing the plant for a week. We will decide at the end of this calendar year whether this is a suitable measure. If we fail, if we go to the WTO [the rules of the World Trade Organization] … it will be about 500 million pounds – 40 million pounds a month, ”said Mardella.

For a senior representative of a major automaker, it is rarely possible to quantify the value of an ad-free Brexit and, as a result, the use of WTO rules. But Mardell also believes that if the UK finds itself in such a situation, it will not last long.

“I personally do not believe that we really will be at these levels of the WTO for a significant period of time,” he said. “I think it will be a negotiating position that is being discussed by one or the other side. Actually, I’m much more relaxed than I would be two years ago. ”

Currently, the JLR has laid off about 50% (20,000) of non-critical workers during the coronavirus crisis, although this month it pays them 100% of the salary. Board executives postponed salary payments for three months, while CEO Ralph Spet’s salary fell by 30%.

The pandemic had a significant impact on already falling sales. The latest figures for the fiscal year 2019/2020 show that JLR sold 508,659 cars, which is 12.1% less than the same period a year earlier. In the last financial quarter, from January to March, a more significant trend was achieved: sales decreased by 30.9% year on year to 108,869 vehicles.

Figures vary between brands. Jaguar sales fell sharply: in general, over the year they fell by 22%, and in the last quarter – by 42.6% to 28,288 units. Land Rover, by comparison, decreased by 7.7% and 25.6%, respectively, selling 81,581 cars last quarter. However, the company quickly indicates its relative success against the backdrop of the crisis.

Range Rover Evoque sales were up a quarter, while Jaguar I-Pace sales were up 40%. The JLR also claims to have completed the fiscal year with £ 3.6 billion and unaudited short-term investments, as well as an unused £ 1.9 billion credit line.

JLR has announced its goal of resuming production in Austria, Slovakia and Solihalle from May 18. Other European plants will open gradually “in due time”, and efforts will be made to ensure maximum safety as part of social distance measures. Production is expected to grow slowly, but that means sales recovery will take time.