Tata Motors Ltd-owned British luxury carmaker Jaguar Land Rover (JLR) has restored three-fourth of its budgeted production in China, at least four people aware of the gradual volume ramp up told Mint.
Chery Jaguar Land Rover Automotive Co Ltd or CJLR’s manufacturing plant in Changshu, which gradually resumed operations from third week of February, has restored its production capacity to 75% of pre-covid-19 levels, said a person mentioned above, requesting anonymity.
Ramped-up production at its China unit will provide a big relief to JLR and Tata Motors, as the company's sales nosedived 85% in the country in February.
Tata Motors had warned its stakeholders that due to the covid induced crisis, JLR’s full year EBIT margin by may reduce by 1%.
JLR's global retail sales for FY20 were down 12% at 508,659 units. That included a 31% year-on-year (YoY) drop in Q4FY20 retail volumes, at 109,869 units.
“FY2019 was a tough year for JLR in China. CJLR’s capacity utilization in that year was about 30-35%. However, the company saw year-on-year volumes increase during Q2-Q3 FY2020 and it was recovering when coronavirus crisis struck," said another person familiar with the development.
While the accurate budgeted production volumes for the month of April are unknown, analysts suggest that CJLR produced an average of 4,500 – 5,000 cars per month during Q1FY20.
CJLR is a 50:50 joint venture between China’s Chery Automobile Company Ltd and JLR. The Tata Motors subsidiary also exports cars to China.
“The CJLR production forecast has not changed year-on-year for the June quarter," a third person said, thereby hinting that the company aims to further ramp up production for the months of May and June to catch up with yoy volumes in Q1FY21.
The Changshu plant has an annual production capacity of about 200,000 units per year and produces models such as Range Rover Evoque, Land Rover Discovery Sport, Jaguar XFL and XEL variants and also the E-Pace model.
In a reply to Mint’s query on the matter, Tata Motors spokesperson said, “China is a very important market for Jaguar Land Rover and, with lockdown measures easing there, all of our retailers are now open and sales are recovering."
The production ramp up at JLR's China business is in line with other rival carmakers, which too are said to be ramping up production, as they see demand returning to normal and customers walking into the showrooms.
The maker of rival Mercedes-Benz cars, Daimler AG said on 29 April that it’s China retail sales restored 97% of monthly sales in March yoy. The German company too reported that it’s production reached 75% of last year’s levels in April. Ford Motor Company on Wednesday said that all its plants in China are operational with 90% of manpower back at work.
Outside of China, JLR is also planning to gradually resume production from 18 May, starting with its Solihull (UK) plant and other facilities in Slovakia and Austria.
According to the company, it’s largest market North America reported a yoy decline of 7.5%, Europe and China saw decline of 16% and 9% yoy respectively. That said, it remained upbeat about the growth in the demand for its Evoque model, which reported a jump of 25% yoy. The retail sales of its all-electric Jaguar I-Pace reported 40% yoy growth.