Britain’s EU Exit Could lead to JLR Losing Profit

Jaguar F-Type SVR_-2

Britain’s EU exit could lead to JLR losing profit due to trade tariffs, labour issues and additional taxes

JLR might get affected adversely if Britain exits EU as the company might have to face concerns regarding margins as well as currency value along with manpower issues.

United Kingdom is considering moving out from the European Union. This decision might have an adverse effect on Jaguar Land Rover because due to this, there might be effects on trade tariffs as there will be a 10% hike in taxes on vehicle being exported to Europe.

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Also, there will be a 4% tax levy which will be implied on the imports for the company. JLR holds nearly 90% of the profits for Tata Motors and they produce nearly 5 lakhs vehicles per annum. If JLR gets affected, Tata Motors might see some tough times ahead as well.

The company is aware of what would be the consequences of this exit and is considering opening a European office as well. The work on their Slovakia plant have been stalled and deferred while the discussions regarding property at Silverstone Race Track have also been put on hold as of now.

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UK will be voting on this referendum on 23rd June which will have direct impact on JLR’s operations in India also. JLR have spoken along with the Society of Motor Manufacturers and Traders which is Britain’s auto industry body and mentioned that this move might lead to increase in costs and threaten jobs.

Europe accounts for 24% of JLR’s sales last fiscal while UK and Europe together contribute 44% to the volumes of Jaguar Land Rover. Industry experts are of an opinion that if UK moves out, it might lead to an economic slowdown which will definitely affect the companies like JLR.

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But at the same time if pound depreciates due to this move, then JLR might benefit from exports. However, with this exit, German cars might become more expensive while JLR will have a chance to regain its market. So all in all there are two sides to it; which one gets the better of JLR, watch this space for details.