British luxury vehicle company Jaguar Land Rover (JLR) is expecting retribution from China as a fallout of the country’s deteriorating relations with the UK.
JLR, owned by Tata Motors, has two iconic models -- Jaguar, with a range of luxury sedans, sports cars and luxury performance SUVs, and Land Rover, encompassing a portfolio of premium all-terrain vehicles.
The Chinese state media reported on July 20 that British firms like HSBC and JLR could face consequences following the ban on Huawei’s entry into the UK’s 5G telecom network business.
“If the UK upholds such a hostile attitude towards China, Beijing may have no other choice but to strike at British companies like HSBC and JLR”, a Global Times article stated.
A negative step by China will hit JLR hard, given that JLR volumes in China had just begun to gather steam. By the end of the June quarter, China regained its position as the biggest market for JLR, generating nearly a third of its global volumes, as per data disclosed by the company.
As markets like the UK, Europe and the US struggled during the quarter, China clocked retail volumes (23,726 units) that were nearly on par with the same quarter last year (24,324 units). Both brands even gained market share during the same quarter, according to details disclosed by Tata Motors.
Speaking to analysts, Adrian Mardell, chief financial officer, Jaguar Land Rover Automotive PLC, said: “There is a lot of political noise. We all know it, we all hear it. We are the biggest Indian-owned company in China. So that obviously has an impact also. Our business model is lean. It’s not overexposed. It balances on fundamentals. And all I can say to you that in a stable operating environment, it will continue to be valuable and it will continue to grow. I can’t comment beyond the risk we all see in any point in time and what incidents happen.”
In addition to a sales company that handles imports from the UK, JLR has a joint venture company in China called Chery Jaguar Land Rover (CJLR).
During FY20, CJLR reported its first loss in five years and the biggest since its inception in FY13. A knee-jerk reaction by China would deepen the worries of the Tata Motors-owned brand.
“If it impacts us like COVID, we'll find a way to absorb it. We wish that the duties that are being put in place within different nations are taken away because we all know that economies work better when trade is free. What we wish for may not happen. We'll respond if anything bad happens. In the meantime, a lean, efficient pipeline and a lean efficient business is what we’re striving to achieve and making huge progress on,” Mardell added.
Source:- moneycontrol.com