Jaguar Land Rover : End of a cycle

After three years of recovery and rating upgrades (five from S&P, three from Moody's), management has significantly lowered its targets to align with the new headwinds (tariffs, USD devaluation, China, higher costs). This is a necessary and consistent measure, which should not jeopardise the IG rating/net cash position, but marks the end of a positive cycle. There are now, in our view, more downside risks than upside potential. In the short-term, there are moderate commercial risks associated with the two new 100% electric Range Rover and Jaguar vehicles due to be launched in 2026. In the medium term, we are concerned that the margin profile will be impacted by the uncertain trajectory of BEVs penetration and increased competition. We are changing our credit opinion to Stable (vs Positive) and lowering our Recommendation to Neutral (vs Buy) on the three EUR-denominated bonds as upside is now fully exhausted.