Jaguar Land Rover made a loss of £860m for its full financial year after its new boss wrote off £1.5bn in a strategy rethink, despite a recovery in sales since the slump at the start of the coronavirus pandemic.
JLR would have made a £660m profit in the year to 31 March if not for the writedown, it reported on Tuesday. The carmaker has the largest automotive manufacturing operation in the UK, but in 2020 lost its crown as the biggest UK carmaker by volume to Nissan.
The pandemic caused enormous disruption during the year, including forcing JLR and every other European carmaker to shut their factories temporarily. Yet sales for the year remained relatively robust at 440,000, a drop of only 14%.
For the first three months of 2021 sales grew by 12% year on year, led by a big jump in Chinese sales when compared with the period of tight lockdowns in early 2020. JLR also reported healthy sales for its new Land Rover Defender off-roader, with 45,000 sold during the year.
However, in February JLR counted the cost of previous strategic missteps, with the chief executive, Thierry Bolloré, ditching a previous decision to invest in a new electric Jaguar XJ. JLR had already revealed the U-turn would cost it £1.5bn, including £950m of non-cash writedowns and £530m in restructuring charges.
It marked the second major writedown in just over two years for JLR, which is owned by the Indian conglomerate Tata. In February 2019 it reported a record £3.4bn quarterly loss after overestimating the value of its investments in China.
Bolloré, who was appointed JLR boss in July 2020, has opted to accelerate its move to electric technology. The Jaguar brand will produce only battery electric cars by 2025, although it will make plug-in hybrid Land Rovers until about 2036. Plug-in hybrids combine a rechargeable battery with an internal combustion engine, and sales will be legal in the UK until 2035.
JLR also flagged continued disruption in its supply chain, particularly from a shortage of computer chips. The shortages – seen throughout the global semiconductor industry because of the pandemic – forced the company to pause production at its factories last month while it awaited supplies.
Bolloré said he was “encouraged by the company’s resilience and strong recovery during a uniquely challenging year”.
He said JLR had made significant progress in implementing an ambitious strategy that “will make us more agile, efficient and sustainable”.