JLR’s Profits Plummet Drastically Post Brexit

The Brexit has been on the focal point of various political discussions around the globe regarding its impact on the local and global economy. The act of Britain leaving the European Union had mixed reactions. It also forced several inevitable and immediate effects to follow, with the most remarkable one being the drop in the value of British pound. The fall in its currency led to an adverse effect on the country’s industries, with the biggest ones being affected the most. It is now being reported that the largest automaker of the country, Jaguar Land Rover (JLR), has registered a drastic 37 per cent fall in its profit in the April-June period of this year.

The damages have been caused due to the foreign exchange losses, which are explained as a result of the fall in the value of the British currency and parts import. Interestingly, Jaguar Land Rover has sold more number of vehicles in the said period compared to last year's. The company posted 16 per cent increase in its global sales this year by retailing 1,32,700 cars in the three-month period (April-May-June).

Parent company Tata has taken the brunt of the massive dip in the profits, but reports suggest that it will only be temporary. The company registered profit before tax of £399 million (close to Rs 3,504 crore) for the April-July period this year as opposed to the £638 million (approximately Rs 5,602 crore) in the same period last year.

Jaguar Land Rover contributes to a major chunk of Tata Motors’s profit and the Brexit has caused some substantial damage to the company. However, according to people familiar with the matter, it is expected to be resolved when new trade treaties are signed with the rest of the EU countries, which could bring down the foreign exchange impact.