Jaguar Land Rover facing "perfect storm"
Manufacturer to cut up to 5,000 jobs as headwinds worsen
JLR is to cut up to 5,000 administrative, marketing and management roles as it attempts to find £2.5 billion in savings to turn its fortunes around. Industry insiders have dubbed the situation it is facing as a "perfect storm" with declining diesel sales, a cautious Chinese market and global political uncertainty leaving the company highly exposed.
With the fallout from the VW emissions scandal continuing to be felt, UK sales of diesel cars declined by 29.6 per cent in 2018. This was particularly bad news for JLR, which still relies on the fuel to power a barely believable 90 per cent of its vehicles. Combined with a continued slump in saloon sales - which has seen the dynamically excellent XE and XF particularly hard done by versus their German rivals - this has spelled trouble for the British brand.
Events beyond the UK's shores have hit the company's bottom line harder still. Total car sales in China (JLR's biggest market) declined for the first time in two decades last year, as the nation's consumers reacted to the economic uncertainty surrounding the introduction of US trade tariffs. Jaguar Land Rover again found itself bearing the brunt of the impact, with its sales falling by 50 per cent against an overall industry decline of just 6 per cent.
The sudden change in fortunes for a marque which, despite previous difficulties, had seemed to be on the up since its acquisition by Tata in 2008, will come as a disappointment to many, not least the 35,000 UK workers who will remain on its books beyond the proposed staffing cuts.
Unfortunately this could only be the beginning of the beleaguered company's woes, though. Executives have expressed fears that a no-deal Brexit could cost it as much as £1.2 billion, while Donald Trump's long-mooted tariffs on European car imports could set it back a further £1 billion, JLR having sold a record 114,000 cars in the US last year.
Beyond the £2.5 billion currently being sought, rumours abound that Jaguar could be reincarnated as an all-electric brand in the not-too-distant future, better positioning it to deliver on future customer demand and lessening the burden it currently places on the far-healthier Land Rover. For now, though, the only sure thing is that against a backdrop of continued political, economic and industry turmoil, the future of the company remains as precarious as it has ever been.
I wish them well though as it would be a tragedy for all those involved if they cannot make it work.
Mercedes, Audi and BMW have spent their way out of the dieselgate scandal in a way that JLR simply can't - they haven't got the resource to be able to rush through a new generation of petrol engines and wave the shiny hybrids around.
I'm really hoping they can make it through the next 5 years without too much drama, and hopefully not just wave the flag and become an all-electric brand, although maybe that's the way to go with the XE and E-pace size cars? Have a big turbocharged six and the V8 for the XF and XJ (and LR cars, e.g. FFRR) and electrify the smaller range.
Mercedes, Audi and BMW have spent their way out of the dieselgate scandal in a way that JLR simply can't - they haven't got the resource to be able to rush through a new generation of petrol engines and wave the shiny hybrids around.
I'm really hoping they can make it through the next 5 years without too much drama, and hopefully not just wave the flag and become an all-electric brand, although maybe that's the way to go with the XE and E-pace size cars? Have a big turbocharged six and the V8 for the XF and XJ (and LR cars, e.g. FFRR) and electrify the smaller range.
Dad was due a new practical car at the end of last year, and he went to have a look at Jags (he has an XK-R so likes the brand), but the best petrol engine option in the XF Sportbrake is a 2 litre petrol (albeit a 300PS one).
I've ended up ordering him an E53 Estate.
The MX5 is very profitable for Mazda, and a sporty hatchback to go up against the likes of the Golf R, A45, M140 etc would certainly sell well, particularly if the oft-quoted downturn really takes hold.
XE which isn't the best looking car and with an interior that's not good enough to compete
XF - good but the sector is shrinking a lot
XJ - good but again one for small sales and the car is relatively old now
F-Pace - good/competitive
i-Pace - Looks like a toy, poor design and interior
F-Type - Good but niche
Barring the XJ, none of the interiors are good enough. They're not bad, but in their sectors 'not bad' is nowhere near good enough.
Whilst the engines are an issue the more significant one, IMO, is that they didn't do a good enough job with the cars they made.
It would end being a botched shortened XE frame, with the 300PS petrol Ingenium engine and four wheel drive, automatic only.
It would cost more than the Golf R, and the press would criticise it for being a bit 'old man'. They'd sell 22, then can it.
IMO - They've devalued the brand(s), by trying to appeal to the emerging and consumer end of the market. They've ridden a wave of popularity but the tastes have changed leaving them with too many models, competing in 'saturated' and fickle markets.
Management went for quantity instead of focusing on quality.
My 2p
M
The XE is a nice car but it hasn't made much of an impact on the C Class/3 Series/A4, ok its not got the horrific image the X type had but buyers dont seem to want it in droves, Alfa and others are muscling in on that segment as well, its ended up an also ran.
The XF is pretty new but a lot arent aware it was replaced with an all new Aluminium bodied one, it has a whiff of bank manager about it, it competes against the 5 series, E class and A6 which is also a tough gig,
The XJ ? er, saw one last year, not a lot want that type of traditional luxury saloon, its all big, SUV's now and those who do still want one buy an S Class. Lovely but something of a curates egg.
Maybe they need to bin off the saloon stuff and major on electrified SUV's ?
(Yes I know they're owned by TATA but it's as close as you'll get)
Offering almost diesel only was one of the reasons I stopped buying Range Rovers (not the only reason), and the S3 XJ was in my opinion the last of the great Jaguars (and the XJS) for wafting comfort - but the game has moved on and waftability is not high on most buyers lists.
There was a post somewhere on PH recently that summed up the model 3 as a low rent car body and interior with a great drivetrain - which if you look at any of the used Model S with 40k odd miles the seat coverings quality (or lack thereof) starts to be come apparent imho this is a problem for a so called premium brand.
I always thought Jaguar should have not created internal competition within the company with the IPace, and instead electrified the XE models to take advantage of the lack of model 3 deliveries in Europe. The fact that a google of IPACE the first line is £4179 off from carwow suggests sales aren't going well - try getting a discount on a Tesla or even Nissan Leaf at the moment and I suspect it is somewhat harder.
But, what do I know - maybe it's all part of a plan to move out of the UK which isn't the most cost effective place for low volume car manufacturing if you are building products that are hard to distinguish from competition that has higher volumes & therefore lower unit costs - something thankfully the likes of Morgan and AM don't suffer from quite as much.
Having said all of this, I sincerely feel for those affected and hope they can find new opportunities.
XE which isn't the best looking car and with an interior that's not good enough to compete
XF - good but the sector is shrinking a lot
XJ - good but again one for small sales and the car is relatively old now
F-Pace - good/competitive
i-Pace - Looks like a toy, poor design and interior
F-Type - Good but niche
Barring the XJ, none of the interiors are good enough. They're not bad, but in their sectors 'not bad' is nowhere near good enough.
Whilst the engines are an issue the more significant one, IMO, is that they didn't do a good enough job with the cars they made.
Although I appreciate the concerns raised over diesel engines has had an impact on their sales ,JLR need repeat / loyal customers if they are going to survive in this very competitive area of car sales. I really do hope they can change their strategy , improve the quality of the product and get their sales back on track before TATA decide to invest their money elsewhere.
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