Currently reading: Analysis: the challenges facing Jaguar Land Rover
After several years of impressive growth, a recent sales downturn shows the hurdles facing JLR
News
4 mins read
31 May 2018

The decision last month to lay off 1000 contract staff out of a total 40,000 workforce may be a disaster for those affected but, on the face of it, it does not signal serious structural issues for Jaguar Land Rover’s business.

That said, although JLR has expanded at pace since its near-death experience after the credit crunch a decade ago, it is now facing a downturn in its fortunes.

In the year to September 2012, JLR sold 269,000 cars worldwide. In the year to March 2018, it sold 614,300. That’s impressive growth and backed by an expanded model line-up including strong sellers such as the Range Rover Velar and the F-Pace, Jaguar’s first SUV.

The top-line results for the fiscal year to March 2018 don’t look too bad, and in fact represent growth of 1.7%. However, the problem for the company lies in a marked fall-off in sales over the past six months of some of its most profitable volume models. It’s a fall-off that is most noticeable since the beginning of the year and showed no sign of slowing during March. Overall, JLR sales fell 3.8% year-on-year between January and March. But in March alone, sales were down 7.8%.

The company’s biggest issue is the UK market, where sales were down 21% in the first three months of the year and a worrying 26% in March alone. Sales in Europe were down nearly 12% between January and March. Across the rest of the world, however, company sales continue to grow. China, JLR’s second-biggest market so far this year, was up 11%.

Officially, the company blames its UK woes on consumer uncertainty over the future of diesel and the effect of Brexit.

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According to figures from research company JATO, in the first quarter of 2018 the share of UK diesel sales fell to just 33%, down from a peak of 49% in 2014. With diesels accounting for 94% of Land Rover’s sales last year, that is certainly going to hit the brand hard. That said, Jaguar and Land Rover both offer petrol engines, so there should be little to stop JLR following the trend away from diesels.

But it also seems likely that JLR will face some very strong new competition, especially given the lack of hybrid drivetrains in its smaller cars.

One sales snapshot from JATO showed that, across 27 European markets in February, Alfa Romeo sold 2204 Stelvio SUVs against 1346 of the Jaguar F-Pace. Alfa sold a modest 41,000 Giulias globally in 2017 but it seems likely that this is having an effect on Jaguar XE and XF sales, chasing the same kind of keen driver who wants a rear-driven car that isn’t German.

If a revived Alfa is nibbling away at Jaguar, it also seems highly likely that Volvo’s new-generation products are proving a headache for Land Rover. Although the Range Rover Evoque has been a runaway success since it was launched in 2011, it is now relatively old and Volvo’s XC40, which is in its first year of sales, is providing hot competition.

Early in April, Volvo UK boasted that the XC40 was its most successful new-car launch yet and that the compact SUV was selling 2000 units a month in the UK alone. Likewise the Volvo XC60 is selling prolifically in Europe, outpacing the rival Land Rover Discovery Sport. In February, the XC60 accounted for 5285 sales across Europe alone, nearly outselling the Audi Q5.

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As far as hybrid drivetrains are concerned, JLR is behind the pack, perhaps because the past few years were consumed by getting its home-grown petrol and diesel Ingenium engine family into production. But the next 18 months will prove crucial. Plans for a hybrid-petrol drivetrain based on a three-cylinder Ingenium engine were revealed at a briefing in September 2015. This set-up uses a compact electric motor sandwiched between the narrow engine and the transmission.

The unit is likely to make its debut in the nose of the second-generation Evoque, and then find its way into a facelifted Discovery Sport in 2019. Jaguar is also running 1.5-litre-engine XE prototypes, but it’s not known whether this is a standard turbo unit designed to offer a low-CO2 petrol alternative to diesel or another hybrid derivative.

JLR has challenges ahead, with significantly stronger SUV competition the most serious. Sales of the Range Rover Sport and Range Rover should improve after this recent model change. Slow sales of the Discovery 5 in Europe (just 691 units in February) remain tricky and much rides on a strong reception for the new Evoque and the new petrol performance and ‘eco’ versions of the XE and XF. The E-Pace is also likely to sell briskly and the I-Pace EV should significantly boost Jaguar’s brand presence. But after a decade of good news, JLR will find expansion to building one million cars a year a fair deal tougher.

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Vee_8 28 July 2018

Dealer Network

What JLR really need now is big investment in its dealer network. It's over stretched and unable to cope with the volume of cars sold. If they can't sort that out then people won't return. It's here that they are way behind the likes of BMW. 

While >4 cylinder petrol engines are nice halo models, again if you look at the bulk of BMW sales it's still 4 cylinder petrol turbocharged engines in various states of tune. Only one 6 cylinder petrol engine now in a 3/5 series (excluding M) which is a real shame as those straight 6 petrols were the main reason for buying a BMW. 

So if Jag want to compete with ze Germans, then unfortunately the market demands economical 4 cylinder cars. Of course they should still do their mad V8 R models. 

For LR, well it's tough right now. SUVs rely on diesel for torque, and until hybrids and electric are good enough to drive heavy SUVs, then like everyone else they will need to tough it out. Although they haven't helped themselves with their poor transverse diesel implementation for EU6. 

AddyT 3 June 2018

Aside from talking about

Aside from talking about Jaguar's perceived failings, I would say Land Rover have a lot to answer for here as well. It made me smile that the new Disco has sold so badly to date - it is an ugly thing and coming on to my second point....too expensive, like so much of the Land Rover range these days. People aren't going to pay £45k for a decent spec Freelander, sorry Disco Sport. New car prices have gone up across the board but the prices LR are charging, and have been for the last few years, are laughable and down right arrogant. As for Jaguar, I do think a couple of cars haven't been the success they hoped, like the new XE. However, I believe they have the right type of cars coming out to resolve that. LR by comparison have kept bringing out overpriced cars and some that aren't perhaps necessary to do so - Velar being the main one I can think of. Evoque convertible also actually - have seen just 2 since they came out. Arrogance and overcharging your customers only results in one thing. I don't blame Jaguar for JLR's challenges - Land Rover are creating them in abundance. 

AddyT 3 June 2018

Aside from talking about

Aside from talking about Jaguar's perceived failings, I would say Land Rover have a lot to answer for here as well. It made me smile that the new Disco has sold so badly to date - it is an ugly thing and coming on to my second point....too expensive, like so much of the Land Rover range these days. People aren't going to pay £45k for a decent spec Freelander, sorry Disco Sport. New car prices have gone up across the board but the prices LR are charging, and have been for the last few years, are laughable and down right arrogant. As for Jaguar, I do think a couple of cars haven't been the success they hoped, like the new XE. However, I believe they have the right type of cars coming out to resolve that. LR by comparison have kept bringing out overpriced cars and some that aren't perhaps necessary to do so - Velar being the main one I can think of. Evoque convertible also actually - have seen just 2 since they came out. Arrogance and overcharging your customers only results in one thing. I don't blame Jaguar for JLR's challenges - Land Rover are creating them in abundance.