Tata Motors issues Brexit warning over Jaguar Land Rover

11 September 2018

Tata Motors issues Brexit warning over Jaguar Land Rover

11 September 2018

Tata Motors, the Indian-based owner of Jaguar Land Rover, believes that protracted Brexit talks are affecting the group’s recovery prospects.

The parent company wants to ensure that its UK business, which it purchased in 2008 from Ford, remains financially strong in the face of challenges the country faces as it negotiates its departure from the European Union. Currently, there is uncertainty over the type of Brexit the country will achieve, with the government fighting over plans for the future of the relationship with the continent.

‘For them [JLR] because they are in the UK, they do not know what the outcome of Brexit is and results of trade agreements are going to be,’ Tata Sons Chairman Natarajan Chandrasekaran told Bloomberg. ‘So there are three or four things, all happening at the same time, so they are having to deal with all of this.’

JLR reported a loss of £210 million (€236 million) in Q2 2018 and warned the government that failing to secure a good deal with Europe would wipe billions off its value and seriously damage its operations. A ‘bad Brexit’ would jeopardise as much as £80 billion (€90 billion) in spending by Jaguar Land Rover over the next five years, CEO Ralf Speth has cautioned, adding extra costs and delays in parts deliveries coming from outside the UK would cut profit by £1.2 billion (€1.3 billion) a year.

JLR has also seen demand for its vehicles in Europe drop amid uncertainty over diesel vehicles, together with additional taxes on the fuel in its home market.

‘We want to make it financially stronger,’ Chandrasekaran said, without elaborating. ‘We believe in that company.’

In July, Speth called for clarity over Brexit. ‘Jaguar Land Rover’s heart and soul is in the UK,’ he said. ‘However, we and our partners in the supply chain face an unpredictable future if the Brexit negotiations do not maintain free and frictionless trade with the EU and unrestricted access to the single market. 

‘We urgently need greater certainty to continue to invest heavily in the UK and safeguard our suppliers, customers and 40,000 British-based employees.’

Senior managers from other automotive companies including Ford, BMW, McLaren and Bentley, along with suppliers to car manufacturers, met Prime Minister Theresa May and Greg Clark, the business secretary, in November last year, the first meeting between the Prime Minister and the sector. There, the PM was told that clarity was needed as soon as possible to allow for manufacturers to invest in the country’s industry.