Jaguar Land Rover sales fall 85pc in China

JLR's Indian parent group Tata Motors said it was continuously monitoring the evolving coronavirus situation closely and its first priority has been the health and safety of employees.

Shanghai-based JLR China and Chery Jaguar Land Rover staff have been working from home, but the offices and joint venture plant re-opened on February 24.

Production will be ramped up as the number of employees returning to work and demand increases.

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JLR sales in China grew on average about 25 per cent year-on-year for the six months from July to December and the company continued to see strong growth for the first three weeks of January.

Since then coronavirus has significantly hit China sales with February sales down around 85 per cent on the same month in 2019.

In the first half of the month only about a fifth of dealers in China were open, but that has since improved to more than 80 pe cent although most are still operating with reduced staffing and facilities.

JLR expects this to improve over the course of March, but sales are expected to recover more gradually.

It is also warning that the spread of the virus to other markets such as South Korea, Japan, and Italy will also impact sales there,

JLR's suppliers in China are resuming operations but remain below full capacity.

The company said its supply chain is primarily based in Europe and the UK, with a relatively small percentage of direct parts from China. Over 95 per cent of its Tier 1 and Tier 2 suppliers in China are now open but at reduced capacity.

The company has managed to avoid potential parts shortages by working closely with its suppliers and with some increased use of air freight.

"In the event of specific parts shortages, Jaguar Land Rover would ordinarily be able to still build cars and retrofit missing parts when available, however, we cannot rule out the risk that a shortage of a critical component could impact production at some point. The spread of the virus to South Korea, Japan, and northern Italy is creating similar issues which we are managing in the same way," Tata Motors said.

The reduction in China sales resulting from the coronavirus is estimated to cut Jaguar Land Rover’s full year earnings before tax margin by about oner per cent.