News that Jaguar Land Rover made £275m profit in the last quarter of 2010 is unalloyed good news. But the suggestion that some analysts think JLR could bank a £1bn profit for 2010-11 is extraordinary.
As recently as 2009, as the global recession raged, JLR approached the then-Labour government for a £500m loan to tide the company over. The negotiations blew up in public, with allegations that the government wanted a degree of strategic control over the Midlands car maker.
Since then, JLR’s turnaround has been remarkable. It has recruited a large number of new staff at its Halewood plant ahead of the Range Rover Evoque going on sale this summer and another 1000 or so engineers are being recruited to work on new projects including Jaguar’s family of compact cars and the long-promised small roadster.
However, the British car industry has been here before. In the past it has had an uncanny knack of replacing successful models by a succession of duffers. For 40 years, British car makers have been hobbled by the inability to perform consistently over many years and many generations of models.
The list of models that were seen as turning points for their respective makers, but which actually crashed and burned in the showroom, is long and depressing. The Austin Maxi, Maestro and Metro. The Rover 600 and 75. The Jaguar X-Type.
Land Rover, particularly, has had a run of good luck and good judgement for the last decade. The BMW-steered Range Rover has worn its decade in production well, becoming a design icon in the process. The Range Rover Sport was a stoke of genius, a vehicle that was rumoured to be the single most profitable product in the whole of Ford’s global empire.
The trick now is to repeat those successes with new models that build on the old but are fresh and modern enough to draw new buyers and existing owners into the showroom.
Although German car makers are past masters at this kind of consistent innovation, the British car industry has long suffered from the ‘one last push’ mentality (where huge hopes are loaded onto a single replacement model), as well an inability to move an admired concept forward in a convincing and self-confident manner.
Jaguar’s previous-generation XJ was a good example of the industry’s dual personality, combining the hugely expensive but innovative aluminium construction with a hopelessly dithering attitude towards moving Jaguar’s design language forward. Producing a fresh new model such as the XF might actually be easier than the job of replacing it.
A billion in the bank is fantastic news in terms of investment in new JLR products. But the pressure is now on JLR’s strategists, engineers and designers to once again re-invent icons such as the Range Rover and E-Type, as well as cooking up convincing and self-confident new offerings, such as a Jaguar crossover.
JLR will have to do something the UK auto industry hasn’t seen for a very long time: replace one generation of successful, profitable, cars with a new generation of even more successful, more profitable replacements.