Jaguar Land Rover has warned that profits face mounting pressure as it contends with intense competition from Chinese manufacturers and the impact of US tariffs under President Donald Trump's administration. The Tata Motors-owned brand reported a £6million pre-tax profit for the second quarter, but the company booked £530million in restructuring charges and significantly downgraded its financial outlook. JLR now expects profit margins of between 2 and 3 per cent for the current financial year, down from an earlier forecast of around 4 per cent.
The company attributed the squeeze to ongoing market challenges, geopolitical risks and exceptional costs recorded during the quarter. An adverse market mix also contributed to the decline, as disruption in the Middle East and China shifted sales towards lower-margin markets such as the UK. While wholesale vehicle sales to dealers recovered in the three months to 30 September, rising to 82,400 from 66,165 a year earlier, total revenue fell to £5.9billion from £6billion in the previous quarter.
JLR has largely recovered from a cyber attack last year that halted production for a month, but the slowdown in its Chinese market remains a significant drag on performance. Chief executive PB Balaji confirmed that job cuts were an integral part of the company's recovery strategy, with 4,000 redundancies progressing ahead of schedule. About 3,000 employees have already signed up to leave by March, and the significant majority will depart by the end of this month.
Competition from Chinese manufacturers is also forcing JLR to cut prices. Balaji said the company would take the necessary actions to remain competitive and protect its intellectual property. Reports emerged this week that JLR orchestrated a raid on the European offices of Chinese automotive giant BYD in August over accusations that its new Ti7 SUV copies JLR's best-selling Defender. However, a judge ordered JLR to destroy copies of seized documents that were deemed not relevant to its copycat claims.
Balaji told reporters that JLR vehicles are built on decades of heritage, engineering excellence and craftsmanship. He stated the company would do what it takes to protect these attributes and would not accept intellectual property infringement. The carmaker is also attempting to reposition its Jaguar brand as an ultra-luxury electric carmaker, unveiling the Type 01 last month, though the design attracted criticism for being polarising.
For UK car buyers and investors, the profit warning signals that JLR faces a challenging period as it balances cost-cutting with the need to invest in new electric vehicles and compete against cheaper Chinese alternatives.