Tata Motors’ British subsidiary Jaguar Land Rover has projected that its operating profitability would suffer in 2025-26 and that its free cash flow would take a big hit due to US tariff hikes and a slowdown in the Chinese market.
JLR, which contributed 71% to Tata Motor’s total revenue and 79% to its total operating profit in FY 2024-25, has guided for operating profit margin in the range of 5-7%, which is lower than 8.4% it recorded in the last fiscal, as it would face higher tariffs in its biggest market i.e North America. The carmaker’s long-term vision is to reach a 15% operating profit margin.
In its investor presentation, JLR stated that its free cash flow in the current fiscal year is expected to reach close to zero from £1.4 billion recorded in FY2024- 25. Shares of JLR’s parent company – Tata Motors – fell 3.5% on Monday to settle at Rs 686.70 a piece.
The luxury carmaker faces multiple present and emerging risks such as semiconductor shortage, Chinese market outlook, rising thefts in the UK, looming concerns such as US tariffs, transition to battery electric vehicles (BEVs), tightening regulations and shifting customer expectations.
JLR said that these challenges have the potential to impact the company’s earnings before interest and tax (EBIT).
JLR expects to bounce back to the growth path in FY2026- 27 and FY2027- 28 after it adapts to the impact of the global macro environment. In one of its most important markets China, where JLR registered a decline in FY25 sales due to broader sectoral challenges in premium vehicle demand and intense competition from other carmakers, the company said that it has prioritised achieving growth in the higher segment.
JLR also stated its strategy to mitigate the impact of US tariffs, which currently stand at 27.5% on vehicles shipped from the UK and Slovakia. A trade deal with the US would bring the tariff to 10% for vehicles exported from the UK.
JLR has temporarily paused shipments to the US in April and is reassessing pricing strategies and reallocating units to more accessible markets to optimise profit delivery.