Why Jaguar Land Rover has changed its tune over Brexit

Jaguar Land Rover has performed a U-turn and announced that Brexit may have a positive impact on sales, whether or not Britain leaves the European Union with a deal.

Over the past two years, the British carmaker has repeatedly warned that a no-deal Brexit could result in tariffs for vehicles exported to the Continent, jeopardising the company’s profit margins and putting jobs at risk.

But in a drastic change of tone, the company’s UK managing director, Rawdon Glover, told Autocar that both Jaguar and Land Rover brands have “shown upswings” despite market uncertainty brought on by inconclusive Brexit negotiations.

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“There is so much uncertainty and all the indicators suggest consumer confidence is down, so there is reasonable cause to look to those concerns as a reason for depressing the car market,” he told the motoring magazine.

“So, thinking positively, you could say that any resolution to the Brexit impasse could help us emerge into a more favourable mindset, possibly even with pricing advantages for anyone building their cars in Britain,” he said.

“It’s a one-sided view,” said Glover, “but my job is to sell Jaguars and Land Rovers in the UK, and I can look therefore at potential upsides to us emerging from Brexit, hopefully with a clear vision for the future that gives people confidence.”

Why the change of heart, JLR?

There seem to be a few key factors behind the company’s apparent shift on Brexit.

Most of the warnings issued by JLR have come from its chief executive, Ralf Speth. In September, for instance, Speth told Sky News that the company’s 3,000 cars per day production line relied heavily on “just-in-time” supply lines, which may become disrupted if extra border checks were introduced.

“Just one part missing could mean stopping production at a cost of £60m a day. That is a huge risk,” he told the broadcaster.

Glover’s comments, however, are in regards to the sales of JLR vehicles. In April, the company reported that year-on-year sales had grown in the UK by 12.1%, suggesting that Brexit hasn’t deterred motorists from buying new cars.

This is partly due to the release of the new Range Rover Evoque (pictured top), says JLR, as well as the continuing success of the all-electric Jaguar I-Pace.

JLR also has a number of new models in the works, including the Land Rover Defender and a rumoured all-electric version of its XJ saloon - both of which are expected to be popular with buyers.

But the company saw massive declines of 45.7% in China. Overseas markets also plummeted by 22.3%, while European sales dropped by 5.5%.

It remains to be seen whether strong UK sales will be enough to cover the ground lost in other key markets.

Is the industry still concerned about Brexit?

Yes. While JLR appears to be less concerned about Britain’s divorce from the EU than it has been, other figures in the industry still fear a no-deal Brexit.

Yesterday, French motoring giant PSA revealed that it would continue to manufacture the Vauxhall Astra in the UK only if a deal with the EU can be reached before Brexit, the Financial Times reports.

Vauxhall’s Ellesmere Port factory in Cheshire “is heavily reliant on access to Europe”, the newspaper says. Around 80% of cars made there are exported to the Continent, meaning any border checks or tariffs imposed in the event of a no-deal Brexit could “severely hurt” business.

The Society of Motor Manufacturers and Traders (SMMT) frequently raises concerns over Brexit’s impact on the industry, too.

As reported by Reuters, an SMMT spokesperson said that “leaving the EU without a deal would trigger the most seismic shift in trading conditions ever experienced by automotive, with billions of pounds of tariffs threatening to impact consumer choice and affordability”.