Land Rover Defender (Photo by Sjoerd van der Wal/Getty Images)
Financially troubled maker of sports cars and luxury SUVs Jaguar Land Rover (JLR) was downgraded by Standard & Poors Global Ratings (S&P) because it expects JLR’s profits to be hit by a sales dive of up to 60,000 in the current financial year following the coronavirus crisis.
British-based and Tata Motors of India owned JLR is not alone in this downgrade movement. Late last month Moody’s Investors Service cut the credit ratings of BMW, Ford Motor, Toyota, Nissan and Honda, and put Mercedes parent Daimler, Groupe PSA, Renault, Volkswagen, and JLR, on notice they might be subject to a cut soon.
S&P, while cutting its debt rating to “B” from “B+”, said Thursday it expects JLR sales to fall from about 510,000 in its financial year ended March 31, 2020, to between 450,000 to 460,000 in the current year because of the ongoing uncertainty caused by the coronavirus.
This is a long way from JLR’s declared ambition for long-term annual sales to hit 1 million.
Land Rover Defender (Photo by Sjoerd van der Wal/Getty Images)
S&P said JLR made a small operating profit in the last fiscal year. It estimates the company had negative free operating cash flow of up to $1.6 billion in that financial year, and that will continue in the current year ending March 31, 2021.
The company lost $4.5 billion the previous year and has embarked on a big cost cutting program.
JLR was hoping to receive a boost from the launch of the new Land Rover Defender, but production has been halted at the Nitra, Slovakia plant and global launch plans are on hold. Like the vast majority of the global auto industry, JLR is currently at a production standstill.
Land Rover Defender (Photo by FREDERIC J. BROWN/AFP via Getty Images)
CEO Ralf Speth recently announced he was retiring in September, and his successor has not yet been announced
As JLR stumbled, there have been reports Tata Motors would seek to sell it. JLR and BMW have announced a plan to collaborate on developing electric motors and transmissions. Late last year rumours circulated that Tata was seeking a partnership with BMW or China’s Zhejiang Geely Holding.
