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Jaguar Land Rover (JLR), the luxury carmaker owned by Tata Motors, expects its full-year revenue to decline to £28 billion in FY26 from £29 billion in FY25, as it grapples with a range of macroeconomic and industry-specific challenges, the company’s management told analysts. The anticipated downturn in topline performance is attributed to a combination of trade-related disruptions, weakening demand in China, regulatory challenges, currency headwinds, and slower adoption of battery electric vehicles.
One of the key concerns highlighted by JLR is the imposition of tariffs by the US. While a recently concluded US-UK trade agreement has brought down tariffs to 10% from the earlier 27.5% on British automobile exports to the US, a trade deal between the US and Europe remains pending. Additionally, demand in the Chinese premium vehicle market has continued to soften, posing a further drag on sales.
The depreciation of the US dollar against the British pound is also expected to impact revenue realisation for JLR, despite the presence of short-term currency hedges. Further, regulatory complexities, such as the need for region-specific development of Advanced Driver Assistance Systems (ADAS) for the US and China, along with slow customer adoption of battery electric vehicles (BEVs) due to charging infrastructure gaps and policy uncertainty, are also expected to weigh on revenues.
In light of these challenges, the company has trimmed its EBIT margin guidance for FY26 to 5–7%, a notable drop from the 8.5% margin achieved in FY25 and well below its earlier forecast of 10%. The margin pressure is expected to stem primarily from trade tariffs, continued weakness in China, and increased investments in sales promotion and brand building.
In FY26, the luxury carmaker expects its free cash flow to be close to zero, compared to £1.5 billion reported in the year-ago period, due to lower margins and increased working capital requirements.
In an effort to counter margin pressure, JLR has laid out a comprehensive cost reduction program aimed at generating annual savings of £1.4 billion. These efforts, expected to begin showing results in the second half of FY26, focus on trimming material, manufacturing, freight, warranty, and structural costs, while driving efficiencies through digital innovation and AI.
Despite the reduction in guidance for FY26, near-zero free cash flows, and macroeconomic uncertainties, JLR remains committed to its £18 billion investment plan for FY24–28. For FY26, the company plans capital expenditure of £3.8 billion, with more than half directed toward engineering, over 20% toward facilities, and the remainder toward tooling and other initiatives.
JLR’s major upcoming product launches include the Range Rover Electric, the Freelander EV developed in collaboration with CJLR, and a low-volume, high-value Jaguar EV, all slated to support demand recovery from 2026 onward.
The company also continues to bolster its strategic partnerships, collaborating with NVIDIA on AI-enabled automated driving systems and with group company Agratas on the construction of the UK’s largest EV battery plant, expected to become operational by 2027. Additional alliances with Dow, Adient, and Tata Communications aim to advance circularity, connectivity, and platform development across JLR’s evolving vehicle ecosystem.
Despite the near-term turbulence, JLR’s market share in its key segments has edged up to 5.9% in FY25 from 5.6% in FY22. High residual values for its models such as the Range Rover and Defender continue to reinforce brand strength in markets like the US, UK, and Germany. Management asserts that the company remains focused on enterprise transformation and building long-term resilience to navigate ongoing industry disruption.
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