JLR decision on possible model cuts due 'in a few weeks,' exec says

Jaguar Land Rover will decide "in a few weeks" whether to further reduce spending and possibly cut models or modify future programs at the British automaker, a top executive said.

The automaker first wants to determine whether global sales will rebound from a collapse caused by the coronavirus pandemic before taking additional steps, PB Balaji, who is chief financial officer at JLR parent Tata Motors, said June 15 during a call with investors.

"In the case of JLR, we need to wait for a few more weeks to understand this better," Balaji said when asked by the call's host, Robin Zhou of Bernstein Research, whether JLR would have to become smaller and leaner if global sales don't pick up. "We don’t want to react to newspaper headlines to decide long-term strategy [because] the decision will impact us three to four years from now."

Some new model programs have already been paused, JLR CFO Adrian Mardell said on a separate earnings call. He stressed that, so far, no programs had been significantly changed or canceled, but said decisions on paused programs would depend on the company’s finances.

“We will come back later in the year once we have figured out the speed of liquidity build and affordability and what that means for those programs on pause,” he said.

JLR reported a 422 million pound (471 million euro, $529 million) pretax loss in its 2020 fiscal year that ended in March after coronavirus-related factory shutdowns and reduced sales cost it 599 million pounds.

The automaker is already in the middle of a cost-cutting program after a slump in China resulted in a record pretax loss of 3.6 billion pounds during its 2019 financial year.

JLR will reduce capital expenditure to 2.5 billion pounds for the current fiscal year, from the more than 3 billion pounds it has spent annually in previous years. JLR expects to save 5 billion pounds in costs by March 2021 as part of its Charge and Charge Plus cost-cutting initiative, Balaji said.

The company has previously said it will add another two models to its portfolio by 2024, taking its vehicle range to 16 including the new Defender SUV.

Next year Jaguar will launch the new full-electric XJ, the first model on the MLA flexible drivetrain platform that will eventually underpin the majority of JLR’s lineup.

JLR is also reviewing the future of the Jaguar brand, Balaji said. The project is being led by the company’s head of marketing, Felix Braeutigam.

“It’s not an easy task. It is very renowned brand, yet in some markets it’s not as strong as it ought to be,” Balaji said. “The team is focusing squarely on what is the brand positioning of Jaguar and how we are going to make it sharper. And how we ensure the portfolio we have is in sync with that position.”

With the exception of the I-Pace full-electric SUV, sales of all Jaguar models slumped in the first three months of the year, with demand for the XE and XF sedans hit hardest.

The automaker has yet to restart production at its plant in Castle Bromwich, central England, where it builds the Jaguar XF, XE, F-Type sports car and XJ flagship sedan, saying it was “prioritizing the most profitable sales” for its factory restarts. UK reports say the plant will remain closed until August 10.

JLR warned that the first three months of its current financial year that started in April will be “significantly impacted by COVID-19.” It declined to give a performance outlook for the year until “clarity emerges on demand.”

China delivered better news for JLR in May with sales up 4.2 percent to 8,068 units compared with the same month last year. The automaker said all its retailers in China were now open.

The company has also started fulfilling the 22,000 orders it has for the Defender. Deliveries of the highly anticipated SUV started in Europe in May, this month in North America and will begin in China next month.