26 September 2018

JLR Caught Out

Jaguar has been on a model offensive and sales have grown quickly. In such a situation, manufacturing capacity is a challenge. Jaguar soon became fully committed and Magna Steyr in Autria was chosen for E and I-Pace on a contract basis. That seemed a sensible solution.

However, suddenly the Castle Bromwich plant in Birmingham will be put on a three day week. Why the sudden turn around? How can that happen so suddenly? There are reasons offered in the media but there is a simple reason. JLR got caught out.

Expanding too quickly. To grow they needed more models, such as a compact car. In the past I often expressed dismay that Jaguar didn't have any SUVs. The reason was Land Rover did them. The move to SUVs demanded they both could do them and we now see that LR hasn't been damaged by Jaguar's late arrival at the SUV party.

Out came the XE a year after the F-Pace, both of which were entering new areas for the marque and benefiting from pent up demand. Before they had time to settle down to what would be their real demand, the E-Pace was coming and a commitment would have to be made as to where it would be assembled. Capacity was tight in the UK and Maga Steyr was chosen. Since then, volumes settled down for the XE and F-Pace which reduced manufacturing demand.

China: With high import duties, Jaguar started making the XF and then XE over there. Jaguar's largest market was now making cars, lessening Jaguar's UK exports to China. The E-Pace will be built there too, despite China now reducing import tariffs.

The diesel scandal. VW started it but everyone within the industry has been affected. The UK move to reduce diesel sales has affected the UK market negatively and caused many buyers to put off a new purchase. This was an unseen development that has impacted on Jaguar.

Increased competition: Premium car makers were basically about three German outfits, with others seemingly caught in the headlights. They've all woken up and lifted their game. Competition is now intense and pressure on maintaining volume an issue.

How will JLR manage the road ahead?

Caught out: All these above factors have combined to force Jaguar to reduce hours worked. Some they couldn't avoid, others they misread. Expanding the range of vehicles with it's excellent design team was the easy part. Managing the way forward will require managerial expertise. Hopefully they are quick learners and this will turn out to be nothing more than a speed bump. They certainly have been caught out.

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