"Not a sustainable situation"
Jaguar and Land Rover make no bones about it: Times are tough. But they are digging in for the long haul.
Jaguar and Land Rover, which are owned by the Indian Tata conglomerate, issued a press release today that was at once surprisingly candid and more than a little depressing, yet offered hope for the two beleaguered luxury brands. (Red ink has flowed like the Ganges since Tata bought them, and the luxury-car business is facing some of its toughest challenges in many years.)
The companies are announcing a new business plan which they expect, perhaps optimistically, will get them through the next 12 to 18 months. Supposedly, the plan includes a “new and expanded range of products and environmental technology, delivered through streamlined and competitive costs and a new manufacturing strategy,” but they had only one new model to confirm today, a production version of the Range Rover LRX concept, which will be the smallest, most fuel-efficient Range Rover model to date. And it won’t arrive until 2011, although we’ll see it sometime in 2010.
Both Land Rover and Jaguar’s new-car sales, like those of most automakers, are down by 25 to 30 percent, and they weren’t exactly at the top of the sales charts to begin with. “This has resulted in manufacturing capacity utilisation of less than 60 percent at Jaguar Land Rover, which combined with the credit crunch, has exposed fundamental weaknesses in the structure of the business,” the release states. “This was not a sustainable situation. Actions taken have started to reverse the trend quarter over quarter and we now have to take the company to the next level of competitiveness. The new plan identifies global competitive benchmarks. These recognise that Jaguar Land Rover has to match if not beat the levels of cost and efficiency achieved by competitors that manufacture in multiple locations around the world.”
The release goes on to state that “a new generation of lightweight sedans, sports cars and premium SUVs, with hybrids and electrification technology will significantly reduce fuel consumption and CO2. Some £800 million has been dedicated to environmental innovation, which will in part be supported by European Investment Bank funds. Finally, there will be additional derivatives and powertrain variants from core model lines.”
This is all well and good, but such products clearly are years, not months, away. In the meantime, Jaguar and Land Rover have to sell the vehicles they currently have. Luckily, Land Rover just finished freshening most of its products for 2010, and Jaguar’s product lineup, of course, is in quite good shape, now that the stunning new XJ sedan is about to go on sale. The new R versions of the XK coupe and convertible and the XF sedan are pretty fabulous, also. Unfortunately, if I can paraphrase the old adage about when GM sneezes, the United States catches a cold, the hard truth is that, when the luxury-car market sneezes, Jaguar always seems to be the automaker that catches a nasty cold. This is a lesson that Tata has learned very painfully over the past year.
The irony is that Jaguar’s lineup has never been better: all three core models, the XK two-doors, the XF sedan, and the new XJ flagship sedan, are superb vehicles and fully competitive in their segments. Land Rover faces even tougher challenges, because even though its products are also very good, SUVs are quickly falling from favor: the eco-friendly LRX can’t come soon enough.
I wish Jaguar and Land Rover the best of luck. They’re going to need it.