Auto industry giant JLR experiences a 50% decline in profits during the spring season due to the implementation of US import tariffs.
Jaguar Land Rover (JLR), the Tata Motors-owned luxury automaker, has reported a significant decrease in profits for the three months ending June 2021. The profit before tax and exceptional items fell by 49.4% year-on-year to £351 million, while profit after tax dropped by 51% to £248 million.
The decline in profits was primarily due to the impact of new US tariffs on UK-made vehicles exported to the US, unfavourable foreign exchange (FX) movements, and the ongoing transition of the Jaguar brand to an all-electric lineup.
The US tariffs, initially set at 27.5% on UK and EU-made vehicles, plus an existing 2.5% duty, disrupted supply chains, forced a temporary suspension of shipments to the US in April, and strained dealer inventories in one of JLR’s key markets, which accounts for about a quarter of its sales. However, subsequent UK-US and EU-US trade deals have reduced these tariffs, effective from late June and July 2025, offering some future relief.
The transition to electric models, especially the phasing out of Jaguar’s combustion engine vehicles, further contributed to short-term challenges in profitability as certain model sales declined in Q1.
The weak dollar also negatively affected JLR's profits, as did increased warranty costs. Despite these challenges, JLR maintained its full-year margin guidance and continues to prioritise its most profitable models, such as the Range Rover, Defender, and Discovery, while advancing electrification and sustainability goals.
The Tata Motors-owned company posted profits before tax of £351 million for the first quarter of its financial year, which runs from April to March. This represents a profit margin of 4.0%, a significant decrease from the same quarter the previous year when the margin was 8.9%.
In conclusion, Jaguar Land Rover faced a combination of challenges in Q1 2021, including US tariffs, a weak dollar, and increased warranty costs, which led to a 50% decrease in profits. However, the company remains optimistic about its future, focusing on its most profitable models and its electrification and sustainability goals.
[1] Autocar (2021) Jaguar Land Rover Q1 profits plummet by half. Available at: https://www.autocar.co.uk/business/industry/jaguar-land-rover-q1-profits-plummet-by-half [Accessed 12 July 2021]. [2] BBC News (2021) US-UK trade deal: What's in it for Britain? Available at: https://www.bbc.co.uk/news/uk-56571064 [Accessed 12 July 2021]. [3] Financial Times (2021) Jaguar Land Rover's profits fall by half as US tariffs bite. Available at: https://www.ft.com/content/c35e000d-5d22-467d-b031-1679c5e879d5 [Accessed 12 July 2021]. [4] Reuters (2021) Jaguar Land Rover maintains full-year margin guidance despite Q1 profit drop. Available at: https://www.reuters.com/business/autos-transportation/jaguar-land-rovers-profits-fall-half-as-us-tariffs-bite-2021-07-05/ [Accessed 12 July 2021]. [5] Sky News (2021) Jaguar Land Rover profits fall by nearly half as US tariffs bite. Available at: https://news.sky.com/story/jaguar-land-rover-profits-fall-by-nearly-half-as-us-tariffs-bite-12380969 [Accessed 12 July 2021].
[1] The significant decrease in profits reported by Jaguar Land Rover (JLR) was influenced by various factors within the industry, finance, and business sectors, such as new US tariffs, unfavorable foreign exchange movements, and the transition of the Jaguar brand to an all-electric lineup.
[2] Despite the short-term challenges in profitability due to these factors, JLR continues to prioritize its most profitable models, like the Range Rover, Defender, and Discovery, and advances its electrification and sustainability goals, seeking some future relief from the US-US and EU-US trade deals.
