Jaguar Land Rover (JLR), the British luxury unit of Tata Motors Ltd, said car sales recovered in China and the US in the June quarter but warned that the demand outlook for its vehicles remains uncertain because of disruptions caused by sporadic shutdowns across its markets.
The sales recovery provides some relief to Tata Motors Ltd, India’s largest commercial vehicle maker, which on Friday reported that loss widened to ₹8,438 crore in the three months to June from ₹3,698 crore in the year-ago period.
JLR’s China business, Chery Jaguar Land Rover Automotive Co. Ltd (CJLR), an equal joint venture between China’s Chery Automobile Co. Ltd and JLR, achieved break-even in the June quarter, the firm said. CJLR’s wholesales stood at 16,513 units in the quarter.
China saw strong recovery in the quarter and demand is improving in North America and the UK, P.B. Balaji, group chief financial officer of Tata Motors, said in a media call.
“About 98% of JLR’s retailers are now fully or partially open worldwide. Land Rover Defender, one of the key launches for the year, now has an order book of more than 30,000 units," Balaji said.
Tata Motors said consolidated revenue from operations fell 48% to ₹31,983 crore because of lower vehicle output and sales in the June quarter.
JLR, which accounted for 86% of Tata Motor’s total consolidated revenue for the June quarter, said loss widened to ₹3,500 crore from ₹2,391 crore in the year earlier because of high fixed costs.
JLR has now set a new target of achieving cumulative cost savings of £6 billion by March 2021 as against the previous target of £5 billion.
The company said that cost-saving plans had delivered £1.2 billion of cost and cash improvement during the June quarter.
“As we reduce the cash burn and take costs out, demand remains the most important lever for this business. It’s a high fixed-cost business. We have reduced our break-even in this business quite significantly," Balaji said, adding that while the management continues to further bring down fixed costs, it is necessary for demand to drive car sales beyond the break-even number.
“With the pandemic, there are a fair number of challenges out there and the demand is not going to come back in a hurry," Balaji added.
He, however, said JLR has access to strong liquidity, which stood at £4.7 billion, including £2.75 billion cash and £1.9 billion undrawn credit facility, as of 30 June.