Tata Motors braces for impact as Jaguar Land Rover pauses shipments to the US

New Delhi: Tata Motors Ltd’s decision to pause exports of Jaguar Land Rover (JLR) cars to the US for April raises concerns for both the company’s volumes and financial performance this fiscal year, as well as for the broader Indian auto sector that sees the country as a key export market.

On 26 March, US President Donald Trump had announced a 25% duty on all cars and car parts imported into the US. Since that announcement, Tata Motors shares have slid over 13% as of Friday’s closing, against a fall of over 5% in the BSE Auto Index.

The North American region—including the US and Canada—accounted for more than a fifth of JLR’s overall sales volume in fiscal 2024. In the January to March period of 2024, it was the largest retail market for the brand. The region accounted for 15% of Tata Motors’ consolidated revenue of ₹4.37 trillion in FY24, and JLR as a brand comprised 69% of that revenue. To be sure, JLR exports to the US primarily from its Solihull plant in the UK.

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“The USA is an important market for JLR’s luxury brands,” the company said in a statement on 5 April. “As we work to address the new trading terms with our business partners, we are enacting our planned short-term actions including a shipment pause in April, as we develop our mid- to longer-term plans.”

No sales in April for JLR in its largest market in the first month of the new fiscal year implies weaker full-year growth for the company, according to two analysts.

“The problem for Tata Motors is that JLR has been facing headwinds in Europe and China. North American market was looking strong but with this decision in the first month, there can be a severe impact on the company,” Sanket Kelaskar, equity research analyst at Ashika Group.

“In the near term, there is a risk of a hit to the volumes of the company due to this decision, resulting in weaker growth,” said Saji John, senior research analyst at Geojit Financial Services. “But the situation remains volatile, so it remains to be seen how the company will tackle Trump’s tariffs.”

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The British luxury car brand constituted 69% of Tata Motors’ overall revenue in the financial year 2024. In the October to December period, the share of the brand in revenue and profit before tax of Tata Motors was almost three fourth. The Mumbai-based company bought the British brand in 2008 for $2.3 billion in a deal that allowed it to tap the international auto markets.

The impact

Meanwhile, analysts are also anticipating impact on component players like Sona Blw Precision Forgings Ltd, Bharat Forge Ltd and Samvardhana Motherson International Ltd, which get significant share of revenue from the US.

CLSA had already downgraded the Tata Motors stock from ‘high conviction outperform’ to ‘outperform’ owing to the impact on JLR following the 2 April announcement of reciprocal tariffs by the US administration. The target price was cut from ₹930 to Rs765.

“We believe the imposition of 25% car import tariffs in the US along with discontinuation of Jaguar Models will result in JLR volumes declining 14% year-on-year in FY26,” analysts at CLSA said. Some analysts note that there is a possibility of rerating the company’s stock in the coming days due to the impact of JLR’s latest decision.

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The company had taken the decision last year to discontinue all Jaguar models such as XE, XF, XF Sportwagon, and F-Type, barring one. JLR plans to make Jaguar an all-electric brand by 2025. In FY24, Jaguar sold 12,437 units in the North America region or about 11% of JLR’s total sales in the region.

Notably, in an analyst meeting held in March, the management of Tata Motors had suggested that the North American market continues to be a strong growth driver.

“US market is holding up well alongside some signs of recovery in EU. The company expects to see strong growth continuing in the near term,” analysts at ICICI Securities wrote in a12 March note.

However, the possibility of tariffs was already acting as a factor of uncertainty for the company, as per multiple analysts note post the meeting.

“Uncertainty around the impact of tariff barriers persists, and the company will wait to assess whether any material changes to its current business model are necessary as a result,” analysts at Motilal Oswal wrote in a 11 March note.

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This comes at a time when Tata Motors is facing a tough car market in India as it recorded sales of 556,000 units in fiscal year 2025 as against 573,000 units in the previous fiscal, a 3% decline.