RE: Jaguar Land Rover facing "perfect storm"

RE: Jaguar Land Rover facing "perfect storm"

Sunday 13th January

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 Β£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 Β£1.2 billion, while Donald Trump's long-mooted tariffs on European car imports could set it back a further Β£1 billion, JLR having sold a record 114,000 cars in the US last year.

Beyond the Β£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.


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Author
Discussion

leakymanifold

Original Poster:

44 posts

32 months

Thursday 10th January
quotequote all
And yet at the same time Volvo is doing swimmingly, now selling more than JLR with a much smaller portfolio of cars and even increasing its sales in China. Suggests the fault lies with JLRs strategy somewhere other than diesel as Volvo had the same engine strategy pretty much.

Cold

7,554 posts

36 months

Thursday 10th January
quotequote all
As per the other thread, it's the J rather than the LR bit that could face future problems.

NJJ

181 posts

26 months

Thursday 10th January
quotequote all
Jaguar needs a radical switch in strategy, an all-EV future seems to be the only way forward. For too long they have been behind the curve, making beautiful but flawed cars. They need to be daring again whilst improving their quality control, it is inexcusable that you hear of so many issues with them.

I wish them well though as it would be a tragedy for all those involved if they cannot make it work.

Edited by NJJ on Thursday 10th January 12:01

Krikkit

16,333 posts

127 months

Thursday 10th January
quotequote all
The engines isn't all of it though, just part of it.

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.

NJJ

181 posts

26 months

Thursday 10th January
quotequote all
Krikkit said:
The engines isn't all of it though, just part of it.

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.
New XJ is rumoured to be all-electric and it cannot come soon enough to inject some excitement into the brand. It needs to be build in the UK though rather than in the I-Pace Austrian plant otherwise I fear for the future of the British plants.

Dr Interceptor

5,542 posts

142 months

Thursday 10th January
quotequote all
Krikkit said:
The engines isn't all of it though, just part of it.
They're a fairly big part of it...

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.

LimaDelta

3,960 posts

164 months

Thursday 10th January
quotequote all
I left LR over four years ago. I can't see myself going back. They have alienated their traditional countryside market in favour of big-wheeled showy baubles for the nouveau-riche and Asian markets. Jaguar aren't much better with bland boxes which could have come from any of the German manufacturers. No character, no style. Shame for the people who will lose their job but I see their previous rise in fortune as an example of short term gain, long term loss.

daveco

3,702 posts

153 months

Thursday 10th January
quotequote all
I really think Jaguar needs a sport hatchback or a car similar to the MX5 to draw attention to the brand.


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.



Frimley111R

10,069 posts

180 months

Thursday 10th January
quotequote all
Jaguar is has :

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.

GAFF1974

58 posts

167 months

Thursday 10th January
quotequote all
The British obsession with all things German doesn't help. Even the police don't "drive the flag".

(Yes I know they're owned by TATA but it's as close as you'll get)

Dr Interceptor

5,542 posts

142 months

Thursday 10th January
quotequote all
daveco said:
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.
It would, but where would the platform come from? It's the underpinnings that cost a fortune to develop...

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.

camel_landy

2,713 posts

129 months

Thursday 10th January
quotequote all
LimaDelta said:
I left LR over four years ago. I can't see myself going back. They have alienated their traditional countryside market in favour of big-wheeled showy baubles for the nouveau-riche and Asian markets. Jaguar aren't much better with bland boxes which could have come from any of the German manufacturers. No character, no style. Shame for the people who will lose their job but I see their previous rise in fortune as an example of short term gain, long term loss.
Yep, I tend to agree with you on that one.

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

J4CKO

28,233 posts

146 months

Thursday 10th January
quotequote all
Sadly, I dont think the traditional premium saloon is a big seller, neither is the coupe and convertible and they need volume, they make SUV's and they seem to sell ok but largely they are competing with the LR side of their business.

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 ?





JerryF

108 posts

120 months

Thursday 10th January
quotequote all
GAFF1974 said:
The British obsession with all things German doesn't help. Even the police don't "drive the flag".

(Yes I know they're owned by TATA but it's as close as you'll get)
Agreed, I have vowed not to buy another German assembled car. Will buy a UK assembled car next and there is a lot of quality products to buy including JLR's.

oilit

789 posts

124 months

Thursday 10th January
quotequote all
It's a real shame, JLR has really been operated as LRj - and the comment about glitzy trinkets styles is bang on for me.

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.

Edited by oilit on Thursday 10th January 12:41

andymc2004

4 posts

121 months

Thursday 10th January
quotequote all
I agree with leakymanifold Volvo are hitting record sales, issue with Jaguar is they dont offer many derivatives for the different models or hybrids. Jaguar always seems to be second to react to the global markets. I think Castle Brom site will close very soon and move production into Solihull and Liverpool.

scottygib553

174 posts

41 months

Thursday 10th January
quotequote all
Frimley111R said:
Jaguar is has :

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.
You forgot the E-Pace............as has everyone else it seems.

Dr Interceptor

5,542 posts

142 months

Thursday 10th January
quotequote all
scottygib553 said:
You forgot the E-Pace............as has everyone else it seems.
I had to google it...

BricktopST205

545 posts

80 months

Thursday 10th January
quotequote all
leakymanifold said:
And yet at the same time Volvo is doing swimmingly, now selling more than JLR with a much smaller portfolio of cars and even increasing its sales in China. Suggests the fault lies with JLRs strategy somewhere other than diesel as Volvo had the same engine strategy pretty much.
Volvo have got their hybrid lineup plus they have their lucrative SUV market. Jaguar has all diesel and saloons which no one buys anymore. Outside of the UK Land Rover products are not as popular as Toyota's for example.

LostCockney

9 posts

9 months

Thursday 10th January
quotequote all
Since TATA purchased JLR they have improved the product line up and improved sales which has been great news for their employees and their suppliers. However, based on my experience of owning a new Range Rover and a Discovery during this period I do not believe the quality of the product meets the requirements of the high cost of a premium product. I suspect a lot of JLR owners during this period would have been disappointed with the premium brand they bought into and therefore when the vehicle was due for renewal they will have taken their business else where.
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.