Tata's JLR slashes FY26 EBIT margin guidance to 5–6% on higher EV investment, product transition
Mumbai:
Jaguar Land Rover
(JLR), the UK-based luxury carmaker owned by
Tata Motors
, has significantly lowered its earnings before interest and tax (EBIT) margin guidance for FY26 to 5–6%, from the previously stated 10%, as it gears up for a year of high capital investment, model changeovers, and an accelerated push toward electrification. The revised outlook was shared as part of the company's Investor Day presentation on June 16, where top executives outlined their medium-term roadmap and strategic priorities.
CEO Adrian Mardell described FY26 as a 'year of transformation,' driven by planned launches of new-generation vehicles and the start of production of key electric models. These developments, he said, will exert pressure on margins and cash flows in the short term but are essential to setting the business up for sustainable growth. The lower margin forecast is attributed to several overlapping factors—elevated capital expenditure, working capital outflows linked to model changeovers, and upfront costs related to electric vehicle (EV) manufacturing readiness across plants.
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Tata Motors shares fall 5% after JLR projects flat cashflow and lower FY26 margins
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The company expects capex to rise to £3.5 billion in FY26, compared to £3.2 billion in FY25. This spike will fund tooling, product development, and upgrades to manufacturing sites, including the Halewood plant, which is being converted into JLR's first all-electric facility. With its multi-architecture strategy encompassing MLA, EMA and the new JEA platforms, JLR is betting on a flexible approach to transition its portfolio.
The first pure-electric Range Rover is expected to roll out in 2025, while an all-new electric Jaguar GT, built on the bespoke JEA architecture, will follow in 2026. Jaguar will become an electric-only brand by then, focusing on high-performance, low-roof GTs priced upwards of £100,000.
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Even as FY26 is expected to be a transition year, the company reiterated confidence in its long-term targets. By FY27, JLR aims to achieve EBIT margins of over 10%, free cash flows of more than £2 billion, and revenue per unit above £80,000, up from around £71,000 in FY25. The management views the current investment phase as a necessary step to unlock this future value. CFO Richard Molyneux said that despite the near-term margin compression, the business model is designed to generate operating leverage once the new models ramp up and premiumisation gathers pace.
JLR's four-brand strategy—spanning Range Rover, Defender, Discovery and Jaguar—remains central to its premium positioning. The company is focused on developing unique identities, customer experiences, and design languages for each brand while continuing to drive average transaction values through special editions and bespoke offerings. Products like the Range Rover SV and Defender 130 have helped JLR increase pricing power, a trend the company expects to continue.
Operationally, JLR ended FY25 on a strong note. Wholesales excluding the China JV grew by 25% to 401,000 units, while EBIT margins improved to 8.5% from 4.9% in the previous year. Net debt declined to £0.7 billion, and the company is on track to become net debt-free by the end of FY25. Liquidity stood at £5.3 billion, providing a buffer for the high-spend year ahead.
While the FY26 guidance reset has tempered short-term investor expectations, analysts say JLR's strategic direction remains sound. The coming year will test the company's ability to execute on its product, EV, and brand strategies under tighter margins, but the broader narrative of transformation and premium-led growth remains intact.
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