Jaguar Land Rover feels interest rate hike pinch, says it may impact demand

  • The automaker, which is owned by Tata Motors, said that although constraints continue, chip supply is expected to continue to gradually improve.
Tata Motors-owned Jaguar Land Rover thinks higher interest rates along with high rate of inflation due to the Ukraine conflict, higher energy prices and post Covid supply disruption will impact demand for its cars globally.
Tata Motors-owned Jaguar Land Rover thinks higher interest rates along with high rate of inflation due to the Ukraine conflict, higher energy prices and post Covid supply disruption will impact demand for its cars globally.

Hike in interest rates by central banks globally is expected to enhance financing costs for consumers and could impact future demand, Jaguar Land Rover said in a report.

The UK-based marquee brand, which aims to be a full stack battery electric player in the next two years, also pointed out that high rate of inflation exacerbated by the Ukraine conflict, elevated energy prices and post Covid supply disruption as other negative factors.

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"Increasing interest rates in 2022 (including the UK, US and Europe) will flow through into financing costs for consumers and could impact future demand," the automaker said in its Interim Report for the third quarter.

The company is working to offset inflationary trends and other issues like high energy prices through profitability improvement actions, it said.

The automaker, which is owned by Tata Motors, said that although constraints continue, chip supply is expected to continue to gradually improve.

"Partnership agreements put in place with key chip suppliers are providing greater visibility over near-term supply," it said.

In an analyst call, JLR interim CEO Adrian Mardell said the company plans to come up with all-new electrified Jaguar products starting 2025 followed by Range Rover and Defender products.

With the transition phase looming ahead, the company expects investments to peak over the next 18 months.

"Within two years, we will have a fully electrified BEV (battery electric vehicle) Range Rover. It's just two years away now," Mardell stated.

"So within two years, most of our vehicles will have fully-electrified offerings and that will be complete in all models before the end of the decade," he noted.

The company estimates 60 per cent of its sales by then to accrue from the BEV trims.

Mardell said the automaker aims to have zero tailpipe emissions by 2036 and net-zero carbon emissions by the end of that decade.

"So our electrified future continues at pace and the investments we're now making are going to grow towards it over the next 12 to 18 months at least," he added.

JLR revenue stood at 6 billion pounds in the third quarter, up 28 per cent year-on-year from the same period of last fiscal reflecting favourable volume, model mix and other factors.

First Published Date: 06 Feb 2023, 10:45 AM IST
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