After several years of impressive growth, a recent sales downturn shows the hurdles facing JLR

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%.

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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.

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.

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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Comments
47

31 May 2018

JLR's misplaced investment priorities have delivered too many high-priced, high-margin, low volume SVR 'halo' models while starving its Evoque/Disco Sport/E-Pace platform of long overdue investment. That the forthcoming Evoque 2 model will be built on this same ancient steel and thereby heavy Ford Focus platform is a disgrace. JLR is dependent on either diesel or thirsty petrol engines to move its overweight, oversized vehicles: not the choice buyers want to hear.

31 May 2018
James Dene wrote:

JLR's misplaced investment priorities have delivered too many high-priced, high-margin, low volume SVR 'halo' models while starving its Evoque/Disco Sport/E-Pace platform of long overdue investment. That the forthcoming Evoque 2 model will be built on this same ancient steel and thereby heavy Ford Focus platform is a disgrace. JLR is dependent on either diesel or thirsty petrol engines to move its overweight, oversized vehicles: not the choice buyers want to hear.

 

Could not agree more with you. A few key initiatives that they need to focus on:

 

1) They desperately need a new small car platform. If it is too expensive to develop a new one independently, consider platform sharing.There could be several potential partners: Mazda, Fiat, PSA, Renault-Nissan?

2) Get the XE range right to drive some volume sales. An Estate is a no-brainer

3) Fix the petrol engines. They don't seem to have been received well, and I suspect need more development work pronto

4) Get the hybrids out quickly. If Toyota have had them around for c15 years, they can't be that difficult to get right.  I think they need both plug-in hybrids, and Toyota / Lexus style hybrids that are not plug-ins. A lot of us in London and city centres who live in flats don't actually have access to reliable charging at home. 

5) Push the volume in the US on the mid-priced models: XE, XF, Disco Sport, E-Pace, F-Pace. 

31 May 2018
unionjack wrote:

James Dene wrote:

JLR's misplaced investment priorities have delivered too many high-priced, high-margin, low volume SVR 'halo' models while starving its Evoque/Disco Sport/E-Pace platform of long overdue investment. That the forthcoming Evoque 2 model will be built on this same ancient steel and thereby heavy Ford Focus platform is a disgrace. JLR is dependent on either diesel or thirsty petrol engines to move its overweight, oversized vehicles: not the choice buyers want to hear.

personally I think 

 

Could not agree more with you. A few key initiatives that they need to focus on:

 

1) They desperately need a new small car platform. If it is too expensive to develop a new one independently, consider platform sharing.There could be several potential partners: Mazda, Fiat, PSA, Renault-Nissan?

2) Get the XE range right to drive some volume sales. An Estate is a no-brainer

3) Fix the petrol engines. They don't seem to have been received well, and I suspect need more development work pronto

4) Get the hybrids out quickly. If Toyota have had them around for c15 years, they can't be that difficult to get right.  I think they need both plug-in hybrids, and Toyota / Lexus style hybrids that are not plug-ins. A lot of us in London and city centres who live in flats don't actually have access to reliable charging at home. 

5) Push the volume in the US on the mid-priced models: XE, XF, Disco Sport, E-Pace, F-Pace. 

Personally I think JLR should combine (like Renault/Nissan) with another maker to produce a new light modular front drive platform. Someone that is about the same size with good reliability (unlike the Germans), with vast mechanical experience and a good understanding on how to collaborate with the British. That can only be Honda

31 May 2018
Oh so you're the one person who though the X Type sharing a platform with a Ford was a good idea? How did that ome work out?

31 May 2018
joe1.0 wrote:

Oh so you're the one person who though the X Type sharing a platform with a Ford was a good idea? How did that ome work out?

I think, given the poorsales figues of the XE, the X-Type wasnt all that bad, it was only the media that gave it bad press for being based on what was at the time the best platform in the sector, but a Ford one. the X-Type AWD basically showed Audi what its Quattro should have driven like, and Audis still dont. 

31 July 2018

.. despite the media labouring on about the "Mondeo" links. Never did VAG any harm selling VW's dressed as Bentleys

31 May 2018
GODFATHER wrote:

Personally I think JLR should combine (like Renault/Nissan) with another maker to produce a new light modular front drive platform. Someone that is about the same size with good reliability (unlike the Germans), with vast mechanical experience and a good understanding on how to collaborate with the British. That can only be Honda

I said years ago, Jaguar should never have been coupled with Landrover when it was sold, I suspect in hindsight it was the only option Ford had to off load them, I said at the time Volvo would have been a better partner, Volvo are on a roll at the moment, every vehicle they have released since and including the XC90mk 2 have been well recieved, they have a nice family look, a pleasing and high quality interior, decent engines, two new platforms and hybrid tech.  

The F-Pace could have been built in line with the XC60, the XF and XJ with the S/V90 and the XE with the S/V60, and the E-Pace with the XC40, I suspect with a bit of developement the SPA platform could be made to fit 6 or 8 cylinder engines and Volvo already had fairly modern straight 6 and a V8 petrol, and I am sure the D5 engine could have been  given a bit more oomph to suit larger Jaguars.   

I dont believe Honda would have suited Jaguar, it would be too similar to the Rover tie up, Hondas are great vehicles, but they are hardly premium, plus they have virtually disappeared from the roads apart from the Civic and the Jazz. 

31 May 2018
Citytiger wrote:

GODFATHER wrote:

Personally I think JLR should combine (like Renault/Nissan) with another maker to produce a new light modular front drive platform. Someone that is about the same size with good reliability (unlike the Germans), with vast mechanical experience and a good understanding on how to collaborate with the British. That can only be Honda

I said years ago, Jaguar should never have been coupled with Landrover when it was sold, I suspect in hindsight it was the only option Ford had to off load them, I said at the time Volvo would have been a better partner, Volvo are on a roll at the moment, every vehicle they have released since and including the XC90mk 2 have been well recieved, they have a nice family look, a pleasing and high quality interior, decent engines, two new platforms and hybrid tech.  

The F-Pace could have been built in line with the XC60, the XF and XJ with the S/V90 and the XE with the S/V60, and the E-Pace with the XC40, I suspect with a bit of developement the SPA platform could be made to fit 6 or 8 cylinder engines and Volvo already had fairly modern straight 6 and a V8 petrol, and I am sure the D5 engine could have been  given a bit more oomph to suit larger Jaguars.   

I dont believe Honda would have suited Jaguar, it would be too similar to the Rover tie up, Hondas are great vehicles, but they are hardly premium, plus they have virtually disappeared from the roads apart from the Civic and the Jazz. 

The problem with Volvo was the overlap. They build the same cars for pretty much the same target audience however Jaguar is more sporty whereas Volvo more comfort. The reason why Volvo does so much better is they have allot more SUVS where as Jaguar has been more restrained by the LR partnership. It was only a matter of time before one would have to been sacrificed and it would have been Jaguar. if you actually include LR with Jaguar, you will notice that JLR sell (only slightly) more then Volvo and have less in common.

Now once the new E pace settles in and the Jpace is launched, they will have a more meaningful lineup. However the biggest advantage JLR has is the electric architecture in the I-pace which is suppose to power the new XJ that is due this year that should take the fight to the S-class in the ever stringent cities with massive profits. 

The Honda collaboration makes sense as JLR needs a modern small platform that could power Acura’s and Hondas in the same way the Renault Megane is the bases for a Mercedes A class. Plus Honda is way more reliable then any euro maker which could work out in JLRs favour and could hopeful rub off on the rest of the Range. Not to mention sharing engines which Honda do really well aswell as sports car.

The Rover venture was more a joke then a partnership as it would have seen the Japanese more in control. This is more 50/50 as they would run individual much like Renault Nissan with a common objective of cost saving and advancing engineering. Much like BMW has been doing with Toyota and Daimler with Renault/Nissan.

 

289

31 May 2018

....I think you are forgetting that Ford PAG was also selling-off Volvo at the time....therefore Volvo was not only a duplication of model segment, but in no position to buy anybody. They were on their arse at the time.

JLR are their own worst enemy. The diesel 'thing' was approaching like a speeding freight train, and yet they couldnt see it coming....add to that the Discovery 5 which is a dogs dinner with a huge price tag, (who the hell signed this munter off?). The Discovery should be the meat and potatoes of the range (as it was in the first iterations), but once again greed took over.

Oh, and if I hear that Brexit bullshit excuse for falling sales (pedalled by Hawes SMMT), one more time.....!

31 May 2018

You mean Honda must collaborate with the Indian Owners! 

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