12 November 2015

JLR's Refocus From 2015

It's been a case of 'pedal to the metal' for Jaguar

JLR has been going at frenetic pace by motor industry standards. It is a capital hungry business and to grow quickly costs a lot. In Jaguar's case it only had three models, two of which were small volume. The XF was the only one that you could call a large selling model and in its segment it is not a big fish. So how was Jaguar going to renew the XF and bring out two new models in a short time frame?

Clearly that is not possible. When entering a new segment, there is no existing model to pay for the enormous cost involved with the new one that's in the pipeline. Two things allowed Jaguar the chance to do so. Firstly Land Rover. That division must have helped finance the rapid growth plan for its partner brand. Secondly, China took off for JLR just at the right time and that sales explosion was still achieved with generous profit. All that money has been ploughed into Jaguar to get it from a fringe player to one that can be profitable in its own right.

The massive spend up is for now done for Jag. The XE starting to pay back some of its outlay. The second generation XF is arriving to do the same. Soon the F-Pace will get the leaping cat into a segment too long ignored by it, the burgeoning SUV market. It too can then pay back what has been spent on it. Now for the refocus.

China is no longer the 'golden goose' and Land Rover needs money to expand its range. Now its time for Jaguar to help LR. Tata has seen the bigger picture and taken a long range view, that is to make money you have to spend it. That is something British management would have struggled with. Now as long as the Unite Union can see past the end of its nose, then it will realise greedy demands will send production offshore and reduce R&D. So don't fret about job losses Unite, just use your loaf.

Jaguar is moving from tiny to mid sized. Land Rover needs to move from mid sizes to large. The level of spending will have to be reduced and costs reigned in. The profit from China came at the right time, but it won't be the same again. That is part of the refocus for JLR.

4 comments:

  1. RayCee,

    It won't surprise you that JLR is very alert.

    Google a bit for "Leap 4.5", the new management plan JLR put in place by JLR to take into account the changed market conditions...

    ReplyDelete
  2. The pressures on car makers to balance all the costs associated with the industry are huge. Why isn't there more co-operation with emissions? The lack of co-operation in such non core activities is baffling.

    ReplyDelete