 "Range Rover, JLR, Jaguar Land Rover")
In what could turn out to be a major upside for UK-based luxury car maker Jaguar Land Rover (JLR), a Tata Motors arm, the US and UK on Thursday announced a trade deal which would now allow UK-based manufacturers to export 100,000 cars to the US that would attract only 10 per cent duty, down from the current 25 per cent.
US is JLR’s most important market, accounting for roughly a quarter of its sales
Tata Motors stock prices went up in two consecutive trading sessions after the India-UK Free Trade Agreement (FTA) was announced which would benefit UK car manufacturers from a quota that reduces tariffs from over 100 per cent to 10 percent.
In a press conference in Washington, US President Donald Trump and the US commerce secretary Howard Lutnik said that the UK would be able to export 100,000 cars annually to the US that would attract 10 per cent instead of the 25 per cent tariff. This would protect “tens of thousands of jobs” in the UK, they said.
In 2024, light vehicle sales in the US totalled approximately 15.9 million units, with around 3 million being passenger cars and just under 12.9 million being light trucks. Lutnik said that a 100,000 units is thus a small number in the context of the overall auto market in the US.
JLR had paused shipments to the US in April following US’ declaration of a 25 per cent tariff on automobile imports. The company does not have a plant in the US and exports cars to that country from the UK and Slovakia plants.
JLR posted flat wholesale and retail volumes for the full year 2024-25 at 400,898 units and 428,854 units respectively.
In the fourth quarter the retail sales slipped 5.1 per cent to 108,232 units even as wholesales were up marginally by 1.1 per cent to 111,413 units.
Interestingly, the wholesale volumes were up 14.4 per cent in North America for the fourth quarter.
According to reports, JLR has resumed shipments to the US in May despite the 25 per cent tariff, while there has been no official confirmation from the company.
While it is not yet clear how the 100,000 quota gets divided among key carmakers, JLR is among the major exporters from the UK, along with BMW owned Rolls-Royce and Mini, and Aston Martin. Around 80 per cent of cars produced in the UK were for overseas markets like the EU, US and China.
China continues to remain a pain-point in JLR global sales. In Q4FY25 Chinese wholesale volumes fell by 29.4 per cent even as Europe grew by 10.9 per cent, and the UK remained flat at 0.8 per cent. Excluding the Chery Jaguar Land Rover China joint venture the wholesale volumes of (111,413 units) was up 6.7 per cent compared to the previous quarter (Q3FY25), and up 1.1 per cent year-on-year.
“China continues to remain under stress. However, JLR remains the least impacted with a decline of just 3 per cent compared to the industry’s decline of over 20 per cent. Its inventory in China is also well under control,” Motilal Oswal analysts had said in a note in March.
The India-UK FTA is also a positive for the car-maker which is witnessing growing demand in this country. UK car manufacturers will benefit from a quota that reduces tariffs from over 100 per cent to 10 per cent. This starts with internal combustion engine (ICE) cars but transitions to electric vehicles (EVs) and hybrids to reflect how manufacturing in the UK is evolving. Similarly, Indian access to the UK market for EVs and hybrids is also staged and under a quota to support the UK auto industry’s transition to fully EVs, while increasing consumer choice.
Tata Motors declined to comment without having the fine-print of the trade deal. JLR saw its highest ever sales in India in FY25 with wholesales of 6,266 units.
Analysts also feel that besides importing vehicles at cheaper rates, JLR also stands to benefit from EV exports. While finer details are not known, the upcoming Tamil Nadu plant of the company may play a critical role in EV exports from India.
