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As demand returns, Jaguar Land Rover recovers up to 75% production in China

As demand returns, Jaguar Land Rover recovers up to 75% production in China

Mumbai: British luxury carmaker Jaguar Land Rover owned by Tata Motors Ltd has restored 3/4th of its budgeted production in China, at least four people aware of the gradual volume ascend told Mint.

CJLR’s manufacturing plant in Changshu, which with time resumed operations from the third week of February, has revived its production capacity to 75% of pre-COVID-19 levels, said an anonymous source.

Increased production at its China unit will provide a big relief to JLR and Tata Motors, as the company’s sales deteriorated by 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 reduce by 1% by May.

JLR’s global retail sales were down 12% at 508, 659 units for FY20. 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.

For the month of April, the accurate budgeted production volumes are unknown, analysts suggest that CJLR produced an average of 4,500-5,000 cars per month during Q1FY20.

Between China’s Chery Automobile Company Ltd and JLR, CJLR is a 50:50 joint venture. 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, etc., and also the E-Pace model.

In a reply to a 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 noticing boom in production and increase in customers, as the demand returns to normal.

Daimler AG, the maker of rival Mercedes-Benz cars said on 29 April that its China retail sales restored 97% of monthly sales in March YoY. The German company too reported such sales of 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 its manpower at work.

From 18th May, JLR is planning to gradually resume production outside China, starting with its Solihull (UK) plant and other facilities in Slovakia and Austria.

Its largest market N. America reported a YoY decline of 7.5%, Europe and China saw a decline of 16% and 9% YoY respectively. The demand for their Evoque model hiked up 25% YoY. The retail sales of its all-electric Jaguar I-Pace reported 40% YoY growth.

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