Automotive News Europe — 2024-02-02
Automotive Industry
Jaguar Land Rover reported record quarterly revenue and solid profits as demand remains strong for its highest priced SUVs including the Range Rover and Defender.
Revenue for the quarter ending Dec. 31 increased 23% to 7.4 bn pounds ($9.4 bn), JLR said in an earnings statement.
Pretax profit rose 73% to 627 m pounds, making it JLR's most profitable quarter since 2017.
Global vehicle sales were up 28% to 109,140, with Defender again the best-seller with a volume of 28,186. The Range Rover Sport was the company's second-best seller at 16,430 sales and the Range Rover, which costs up to 202,000 pounds for the luxurious SV model, was No. 3 with sales of 15,581.
The results are further confirmation of the success of JLR's change of focus to higher priced, lower volume models in response to a prolonged period of losses that started in 2018.
JLR is targeting an 8% margin for the company's financial year ending March 31, and 10% by the 2026 financial year.
The company also plans to be debt-free by the 2025 financial year, clearing away an obligation that currently totals 1.6 bn pounds.
JLR's results were helped by lower material costs, down 271 m pounds from the previous quarter. The fall was largely because of a normalization in the market for computer chips, Chief Financial Officer Richard Molyneux said.
"We are not having to spend anywhere near the amount of money that we were spending this time last year on broker buys for chips," he said on Friday on a call with financial analysts.
Discounting, engine shortage
Profitability was also boosted by higher pricing, JLR said, without giving an average selling price.
However the automaker's ability to charge more for its cars was partly offset by an increase in variable marketing costs, including discounting. "It is getting a little bit more costly to acquire customers," Molyneux said.
JLR is also suffering from the lack of availability of some parts. Defender sales were down from the previous quarter because of an engine supply problem. The affected engine is shared between Defender and Range Rover, so the higher priced Range Rover was given priority, Molyneaux said without naming the engine.
JLR said it had 16,000 pre-orders for the upcoming full-electric Range Rover after it opened a waiting list for the SUV in December. Customer deliveries will start in February 2025, Molyneaux said.
The Range Rover Electric is Land Rover's first all-electric model and is being positioned above other variants in the range, which will help ensure it does not drag down profitability.
"This car will be the ultimate expression of what a Range Rover is," Molyneaux said. "From that perspective, there is no reason to assume that the margins are going to be lower."
To accelerate the assembly of EVs, JLR's owner, Tata Group is building a battery plant in the UK that will supply JLR's battery-powered models. The plant will start mass production in 2026.
Work has begun on the site for the factory in Somerset, England, Tata Motors Chief Financial Officer P.B. Balaji confirmed on a call with reporters.
Range Rover thefts
On a call with journalists, JLR CEO Adrian Mardell criticized "misinformation" about thefts of Range Rovers, which have widely been reported to have become a common target for criminals. "It is not Britain’s most stolen vehicle," he said, citing government data for 2023.
He called on insurers to do more to provide coverage for owners of new Range Rovers, which have seen much lower levels of thefts than slightly older models. His remarks come after a number of customers complained of high premiums or, in some cases, that they could not get coverage at all because of thefts.
"There is no reason whatsoever why any insurance company should not gladly and readily insure those new vehicles - zero reason," Mardell said, adding that JLR was having to help fund police security at ports to tackle the problem of cars being stolen and shipped abroad.