The Jaguar Land Rover which was founded and initially owned by British Leyland, passed through the hands of many automobile giants such as BMW and Ford Motor Company before being acquired by the colossal Indian automobile company Tata Motors in 2008. From 2013, the Jaguar Land Rover is being manufactured by Jaguar Land Rover Ltd. a British multinational car manufacturing company formed by both Land Rover and Jaguar Cars. Since its purchase with $2.3 billion from Ford in 2008, Tata Motors has been trying to ameliorate the sales of this particular product. However, Instead of progress, recently, the balloon went up when the company incurred a loss of 354 million pounds in the first quarter of 2019 which ends on March 31st.
What problems is the JLR brand facing and what are their failures?
- The company’s loss of $3.8 billion in the last quarter which ended in December 2018 has been termed as “the biggest in Indian Corporate History” by CNN. JLR chief executive Ralf Speth has said in a February report published by the CNN, “Our overall performance continued to be impacted by challenging market conditions in China. We continue to work closely with Chinese retailers to respond to current market conditions.”. Apart from a declining sales graph in China due to tense US-China trade relations, there are several other conditions that have impacted the loss-
- The slow progress and the uncertainty of Brexit which has affected investment in the UK. Mr Ralf Speth has already warned investors that Brexit “could put the business in jeopardy”. The BBC reported that Brexit could result in an increase in costs both ways- for “exports of car and the imports of parts”.
- The shift away from diesel in Europe due to its adverse health effect has affected sales too. Forbes reported that “90% of JLR sales in Britain” were diesel based.
- Declining product quality has also resulted in a drop in sales in China. Automotive News Europe reported that “In 2017 alone, JLR carried out 13 recalls in China for defects with components ranging from engines, instrument panels and airbags to batteries. The recalls covered some 106,000 vehicles, which was equivalent to more than 70 per cent of its local sales during the year.“.This problem pertaining to the product quality has been persistent since the company’s ownership under Ford. John Zeng, Managing Director of LMC Automotive Shanghai said, due to quality issues JLR had multiple recalls in China which “greatly jeopardized Chinese Consumer’s confidence in the brand value”.
- JLR Profit and Loss Data :
|Years||Profit and Loss in pounds|
|2019 (till first quarter, 31st March)||-354 million|
Source: Automotive News Europe.
Amidst speculations of selling a minority stake and investing in joint ventures, a Tata Motors spokesperson has said, “Tata Motors is not looking to divest its stake in JLR and we would not like to comment further on any market speculation”, as reported by the Economic Times. Tata Motors has 100% ownership over Jaguar Land Rover.
Jaguar’s very latest launch is the i-Pace electric vehicle. Apart from this, there are ten other models- Land Rover(Discovery and Discovery Sport), Range Rover (Sport, Evoque, Velar), Range Rover, Jaguar(F-Pace, E-Pace, XF, XE). The Automotive News Europe reports that in the “gloomy year” of JLR, Range Rover Velar was a “bright spot”. Neil Winton contributor at Forbes suggests, “The Land Rover side of the business has more potential to become viable long-term with its impressive and distinctive range of SUVs which can compete on price with the German equivalents. But JLR’s small size suggests that it might need to link up with another manufacturer. Volvo of Sweden has benefited from its link up with Geely of China.”
Sources- Automotive News Europe, Bloomberg, Economic Times, Forbes, CNN Business, BBC, The Guardian
Image Credits- Car Brands, List of Car Brand Names, Tata Motors, The Drive, 1zoom.Me