Twin blows for JLR from Chinese tax, EU-US pact

Jaguar Land Rover (JLR) is staring at a fresh wave of geopolitical and policy-driven turbulence, with China slapping a 10% tax on most luxury cars and the European Union (EU) proposing tariff relief only for automakers that manufacture in the US.

- Ayaan Kartik

For the Tata Motors-owned brand, which does not have a manufacturing base in the US, these twin developments could complicate recovery efforts and further squeeze profit margins.

Starting July 20, China imposed a 10% luxury consumption tax on cars priced over 900,000 renminbi. This covers most of the models sold in the Chinese luxury car market.

Earlier, only cars priced above 1.3 million renminbi attracted the levy from the Chinese government.

The timing of the twin hits could hardly be worse. Just a month ago, Jaguar Land Rover trimmed its growth forecast for the current fiscal year.

Now, analysts are warning that these latest trade and policy shifts risk derailing the company's already modest FY26 guidance of 5-7% earnings before interest and tax (EBIT) margin.

JLR had banked on reduced tariffs on exports from its Slovakia plant to the US, but that scenario may now be overtaken by events.