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The UK votes for Brexit and it will impact automakers

It's the first morning after the United Kingdom voted for what's become known as Brexit – that is, to leave the European Union and its tariff-free internal market. Now begins a two-year process in which the UK will have to negotiate with the rest of the EU trading bloc, which is its largest export market, about many things. One of them may be tariffs, and that could severely impact any automaker that builds cars in the UK. This doesn't just mean companies that you think of as British, like Mini and Jaguar. Both of those automakers are owned by foreign companies, incidentally. Mini and Rolls-Royce are owned by BMW, Jaguar and Land Rover by Tata Motors of India, and Bentley by the VW Group. Many other automakers produce cars in the UK for sale within that country and also export to the EU. Tariffs could damage the profits of each of these companies, and perhaps cause them to shift manufacturing out of the UK, significantly damaging the country's resurgent manufacturing industry. Autonews Europe dug up some interesting numbers on that last point. Nissan, the country's second-largest auto producer, builds 475k or so cars in the UK but the vast majority are sent abroad. Toyota built 190k cars last year in Britain, of which 75 percent went to the EU and just 10 percent were sold in the country. Investors are skittish at the news. The value of the pound sterling has plummeted by 8 percent as of this writing, at one point yesterday reaching levels not seen since 1985. Shares at Tata Motors, which counts Jaguar and Land Rover as bright jewels in its portfolio, were off by nearly 12 percent according to Autonews Europe. So what happens next? No one's terribly sure, although the feeling seems to be that the jilted EU will impost tariffs of up to 10 percent on UK exports. It's likely that the UK will reciprocate, and thus it'll be more expensive to buy a European-made car in the UK. Both situations will likely negatively affect the country, as both production of new cars and sales to UK consumers will both fall. Evercore Automotive Research figures the combined damage will be roughly $9b in lost profits to automakers, and an as-of-yet unquantified impact on auto production jobs. Perhaps the EU's leaders in Brussels will be in a better mood in two years, and the process won't devolve into a trade war. In the immediate wake of the Brexit vote, though, the mood is grim, the EU leadership is angry, and investors are spooked.

Jaguar-Land Rover rules out downsizing into new segments

Jaguar-Land Rover (JLR) will continue expanding its portfolio of models during the 2020s, but the group confirmed it won't chase volume by branching out into smaller segments like its German rivals. The two brands will instead seek partnerships to generate economies of scale. "We should not and will not drive down into segments just to get economies of scale," said Felix Brautigam, Jaguar-Land Rover's chief commercial officer, in an interview with Autocar. He added the second-generation Range Rover Evoque (pictured) released in 2018 is already a relatively small car. It stretches 172 inches from bumper to bumper and 75 inches from side to side, so it's approximately 4 inches longer and 5 inches wider than the eighth-generation Volkswagen Golf. It's about 8 inches taller than the German hatchback, however. While that's small by luxury car standards, Mercedes-Benz and BMW respectively went smaller with their Smart and Mini brands. Audi doesn't have an entry-level sub-brand, but it doesn't need to because it's part of the gigantic Volkswagen Group. Japanese luxury firms like Lexus and Infiniti are also part of bigger companies. Brautigam's comments bury numerous rumors. They confirm Jaguar won't take on the Mercedes-Benz A-Class, the Audi A3, and the BMW 1 Series with a model positioned below the XE, which competes against the C-Class, the A4, and the 3 Series, respectively. They also douse cold water on the born-again Freelander (which ultimately morphed into the LR2 in America), which Land Rover was allegedly developing to slot directly below the aforementioned Evoque. Ironically, JLR might soon have access to platforms capable of underpinning smaller vehicles. Parent company Tata Motors is actively looking for an outside company to link arms with the British brands, according to a separate report. Officials reportedly approached BMW -- which used to own Land Rover, and announced a joint-venture with the group in 2019 -- and Geely, the Chinese giant whose portfolio of brands includes Volvo, Polestar, Lotus, Proton, London Taxi Company, Terrafugia, and half of Smart, plus a sizeable, nearly-10% stake in Mercedes-Benz parent company Daimler. Geely told Bloomberg it hasn't heard from Tata or JLR. BMW and Tata remained silent. While a partnership with someone looks likely considering the significant hurdles faced by JLR, its parent company has categorically ruled out selling the duo it purchased from Ford for $2.3 billion in 2008.

Jaguar Land Rover parent Tata posts a loss over coronavirus

BENGALURU — India's Tata Motors posted a wider loss for the September quarter on Tuesday as the COVID-19 pandemic sapped demand in several of its key markets. The global health crisis has hammered sales for automakers worldwide and compounded problems for Tata Motors, which was trying to improve Jaguar Land Rover (JLR) sales amid weak demand and uncertainty related to Brexit. Tata Motors reported a consolidated net loss of 3.14 billion rupees ($42.47 million) for the second quarter ended Sept. 30, compared with a loss of 2.17 billion rupees a year earlier. Retail unit sales at luxury car unit JLR, which rakes in most of the company's revenue, was down nearly 12% for the reported quarter. Tata Motors, however, said it expects JLR sales to gradually improve. "Despite concerns around the risk of a second wave of (COVID-19) infections ... we expect a gradual recovery of demand and supply in the coming months," the carmaker said in an exchange filing. Total revenue from operations fell 18.2% to 535.3 billion rupees. Tata Motors said it was committed to achieving near-zero net automotive debt in the coming years. Shares of Tata Motors ended 1.46% higher on Tuesday while the broader Mumbai market settled 1.03% higher.