It’s business as usual for JLR

For a company whose leadership was quite vocal about the pitfalls of a British exit (Brexit) from the European Union, Jaguar Land Rover’s reaction to Friday’s historic mandate was relatively subdued.

“For Jaguar Land Rover, today is just business as usual. We are a British business with a strong manufacturing base in this country, we call Britain home and we remain committed to all our manufacturing sites and investment decisions,” the Tata Motors-owned company said in a statement.

JLR added that it respected the views of the British people and, in line with all other businesses, would manage the “long-term impact and implications of this decision: nothing will change for us, or the automotive industry, overnight”.

Europe, reiterated JLR, was a key market, comprising 20 per cent of global sales and “we remain absolutely committed to our customers in the EU”. It also acknowledged that there would be a significant negotiating period where the automaker looked forward to understanding more as details emerge.

Road ahead “We look forward to working with the British Government and the automotive sector to ensure that the UK’s automotive industry remains as competitive as ever and that negotiations between the UK Government and the EU will continue to recognise the importance of car manufacturing to the UK and European economies."

At one level, JLR has reasons to be politically correct, especially when sentiments across the UK and the world are running high. Yet, it would be reasonably logical to assume that the company’s management would be more than worried while contemplating the road ahead.

After all, Europe accounts for a fifth of its sales and is today its largest market having taken over from China where JLR has faced a rough ride in recent times. So long as Britain was part of the EU, there were obvious benefits accruing in terms of zero levies on cars exported to Europe as well as on components imported into the UK. This will no longer be the case which means that there are serious costing challenges to be tackled in the months ahead.

It remains to be seen if JLR will step on the gas with the commissioning of its Slovakia plant. It is due to be operational only in 2018, but the country’s EU membership status will be a big help in offsetting the benefits the UK operations will lose out on including free trade pacts with other countries.

According to a top automotive CEO, the Brexit mandate is a reflection of the volatility being experienced across the world. While Russia and Latin America continue to remain wobbly, China’s pace of growth has slackened in recent times. In addition, issues like the refugee problems and terrorism are taking their toll on a host of nations.

JLR recently commissioned a plant in Brazil when the country is going through its worst economic crisis. Yet, the decision to set up a facility there was made when the country was one of the bright stars in the global horizon. All this only puts in context the high levels of unpredictability in today’s times.

Tata Motors steered JLR through some difficult times since its acquisition in 2008. The world was then in the grip of a recession and big automotive brands had their backs to the wall. JLR has since emerged from the abyss and is today the most important growth engine for Tata Motors. It will now be hoping that it can cope with the economic realities of a post-Brexit era.

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