Three-fourth of its budgeted production in China has been restored by the Tata Motors Ltd-owned British luxury carmaker Jaguar Land Rover (JLR), said reports quoting sources with knowledge of the matter.
Reports stated that amid a revival of demand in China, production capacity has been increased to about 75 per cent of pre-covid-19 levels at the manufacturing plant in Changshu of Chery Jaguar Land Rover Automotive Co Ltd or CJLR. The plant had initially opened up in late February and has gradually increased its production rate.
In February, the sale of JLR had dropped by 85 per cent in China and the increase in production capacity at its China unit is expected to be a source of relief for the company as well as for Tata Motors.
JLR’s full year EBIT margin by may reduce by 1 per cent because of the coronavirus pandemic, Tata Motors had warned its stakeholders.
There was a 12 per cent drop in the number of cars sold by JLR globally in the financial year of 2019-20 at 508,659 units which also included a drop of 31 per cent year on year in sale of vehicles in the fourth quarter of FY20 (January to March quarter) at only 109,869 units.
“FY2019 was a tough year for JLR in China. CJLR’s capacity utilization in that year was about 30-35%. However, the company saw year-on-year volumes increase during Q2-Q3 FY2020 and it was recovering when coronavirus crisis struck,” said reports quoting sources from the company.
During the first quarter of FY20, CJLR produced an average of between 4,500 and 5,000 cars per month according to estimates of analysts, even though accurate budgeted production volumes for the month of April are unknown.
CJLR is a 50:50 joint venture between China’s Chery Automobile Company Ltd and JLR. The Tata Motors subsidiary also exports cars to China.
“The CJLR production forecast has not changed year-on-year for the June quarter,” said reports quoting the sources. The sources essentially hinted that the aims of the company is to further increase production in the months of May and June do that it could match up production to the targets for the first quarter of FY21.
Models such as Range Rover Evoque, Land Rover Discovery Sport, Jaguar XFL and XEL variants and also the E-Pace model are manufactured at the Changshu plant of the company that has an annual production capacity of about 200,000 units.
“China is a very important market for Jaguar Land Rover and, with lockdown measures easing there, all of our retailers are now open and sales are recovering,” a Tata Motors spokesperson told the media the in response to the issue.
A number of global car makers have started production at their production units in China as the country slowly is returning back to normal after the pandemic.
JLR also plans to reopen its factories outside of China and plans to start off the process with opening of its plant in Solihull in the United Kingdom, followed by other units in Slovakia and Austria.
(Adapted from LiveMint.com)