JLR’s June-2018 wholesales below estimate at 37.5k

Deferred purchase in China due to import duty cut impacts sales

*  JLR’s wholesale volumes declined 24% YoY (-20.5% MoM) to 37.5k units (est. of 50k units; includes China JV volume of 7.6k units) in June 2018.

*  Jaguar volumes declined 16.9% YoY to 10.4k units (est. of 15.5k units), while Land Rover volumes fell 26.6% YoY to 27.1k units (est. of 34.5k units).

*  JLR’s retail volumes increased 0.9% YoY (+7.8% MoM) to 52k units, as Jaguar retails grew 6.4% YoY (+12.6% MoM) to 16.3k units, while LR retails declined 1.5% YoY (+5.8% MoM) to 35.7k units.

*  Growth in Jaguar volume was led by E-pace (4.5k units), while volumes of other models like XF, F-Pace and XE declined 20.2%, 30.8% and 12.5% YoY, respectively.

*  LR’s retail volumes fell 1.5% YoY to 35.7k due to a decline in most models, barring Velar (5.4k units) and RR Sport (+2.2% YoY).

*  Region-wise, sales in the UK and the US grew 0.9% and 7.4% YoY, respectively. However, in China, sales declined 9.5%, as the reduction in import duties on passenger vehicles in China from 1st July continued to result in deferred purchases. In Europe, too, sales declined by 3.8%.

*  Mr Felix Brautigam, Jaguar Land Rover Chief Commercial Officer said, “We have seen a positive month for Jaguar ahead of the start of customer deliveries of our Jaguar I-PACE, the car at the forefront of our electric vehicle revolution. Strong retails of the sporty and compact SUV Jaguar EPACE in Europe, the UK and our Overseas region are driving sales performance for the brand, which is up over 6% for the month.”

*  On decline in retail sales in China he said “Land Rover sales declined slightly in June as China waited for the welcome reduction in import tariffs as of July. This was largely offset by increases in sales in UK, USA and our Overseas region. The award-winning Range Rover Velar continues to make its mark across all regions. Its combination of elegant design and refined capability successfully translates into growing global sales.”

*  The stock trades at 6.9/6.1x FY19E/20E consolidated EPS. Maintain Buy with a target price of INR459 (Mar-20 SOTP-based).

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