Jaguar slides to loss as tariff shake-up knocks sales in China

JAGUAR Land Rover has clocked up its first quarterly loss in three years as sales of some of its off-roaders went into reverse and a change to import duties put the brakes on growth in China.

Britain’s biggest carmaker made a £264m pre-tax loss in the three months to the end of June, from a £595m profit last time. Total sales fell 6.7pc year on year to £5.2bn as JLR bemoaned a series of challenges from fears of a trade war to Brexit uncertainty and a consumer backlash against diesel.

It also ran into trouble in China, a key market, where it said wholesale buyers such as car dealerships delayed purchases to wait for an import duty cut to take effect. In May Beijing said it would drop tariffs on imported passenger cars from 25pc to 10pc from July 1 in an attempt to defuse trade tensions with the US.

Globally, sales at the wholesale level fell 5pc in the quarter, to 131,560. Retail sales direct to consumers rose 5.9pc to 145,510 units. However, retail sales of the Jaguar F-pace SUV slumped 4.6pc in the quarter, the bestselling Land Rover Discovery Sport declined 3.8pc and the Range Rover Evoque slipped 7.8pc. The Range Rover Velar and Jaguar E-pace models performed better, climbing 15.5pc and 11.3pc respectively. Sales in the UK, JLR’S fourth biggest market, climbed 3.3pc, but in the bigger continental market they dropped by 2.4pc as consumers continued to turn against diesel.

The Coventry-based company also blamed the profit fall on being forced to offer bigger incentives in China to make sales in advance of the import levy changes, unfavourable exchange rates, and rising depreciation and amortisation on investments.

Ralf Speth, chief executive, said the China duty reduction and “negativity” over Brexit and diesel meant the company would look at “reducing costs and boosting operational efficiency and capability” as it tackles the slowdown.

So far this year JLR has axed 1,000 of its 1,800 agency staff in the UK, cut the number of shifts at its factories and moved permanent staff around British plants to reflect falling demand. JLR is also moving production of its Discovery off-roader from its Solihull plant to a new factory in Slovakia.

Mr Speth said he expected sales to improve over the year, driven by “continued ramp-up of new models, most recently the electric Jaguar Ipace, and with the new lower duties effective in China”.

JLR has been hit hard by the consumer backlash against diesel in the wake of the Volkswagen emissions scandal in 2015.