JLR defies Brexit uncertainties

Jaguar Land Rover delivered a strong performance in 2016, defying the uncertainty that followed the Brexit vote, as its sales for the year comfortably crossed the half-a-million mark — a notable target that the car maker surpassed for the first time in the financial year ending last March.

In the year to December 2016, Jaguar Land Rover sold 583,313 cars: a 20 per cent year-on-year gain. Jaguar made a particularly strong showing with its sales up 77 per cent for the year, boosted by the sales of the F Pace - the brand’s first SUV and the XE and XF. Growth at Land Rover - 8 per cent - was somewhat muted by the upcoming launch of the new Land Rover Discovery this February.

Group Sales Operations Director Andy Gross expressed his confidence about the year ahead for the group, despite the remaining uncertainties around Brexit, which the auto sector has warned could hit it hard.

While the weak pound has supported British exports in recent months, should Britain fail to reach an agreement to maintain tariff-free access for its auto sector to the continent, it could hit both raw material costs and sales.

Last year the President of the Society of Motor Manufacturers and Traders urged the government to stay in the single market and warned that EU tariffs on cars could add £2.7 billion to imports and £1.8 billion to exports.

There will also be pressures on the UK market: the SMMT warned that while sales were strong in 2016, 2017 would be a challenging year, with the market’s strength resting on its “ability to maintain our current trading relations”.

While both markets are important to JLR (it sold 117,571 vehicles in the UK in 2016 and 138,695 in Europe) Ian Fletcher, Principal Analyst at IHS Automotive, says the company remains well placed for 2017. “The F Pace has delivered an exceptionally strong performance, and there is plenty more to come from it,” he said.

IHS Automotive forecasts JLR sales to rise 8 per cent this year and to reach sales of 800,000 units annually 2021.

“There is still plenty of momentum and new vehicle launches,” he said pointing to the Land Rover Discovery and the expected broadening of the Range Rover portfolio.

He said the diversification of its manufacturing base - the latest being the plant in Slovakia where the new Discovery is to be built from 2018 - and foothold in markets such as China and the US would help offset any weakness in the UK and Europe.

Jaguar Land Rover itself has joined other automakers in expressing concerns about the impact of Brexit.

In November, the BBC reported that CEO Ralf Speth told an industry event that the company hoped to double production to one million cars but that its ability to do so would depend on government support, particularly around infrastructure and access to engineering talent.

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