Another interesting telling article, from autocar!
For a large part of the last decade, the ambition at Jaguar Land Rover was to get to a million units per year. But it never threatened to get there, JLR’s record year of just over 620,000 sales coming in 2017.
To get to that 1m figure, JLR would need to make smaller models, and smaller models mean less profits. It's no coincidence that Mercedes-Benz is set to abandon smaller models altogether in pursuit of bigger and more luxurious cars. BMW is understood to be considering something similar.
Just how reliant JLR is on its largest models was laid bare again in its latest financial results this week. The half-a-billion loss over the past three months was caused by delays in getting the Range Rover and its Range Rover Sport sibling – JLR’s cash cows – into production, as our Nick Gibbs detailed in his analysis of the figures this week.
For JLR, it was an unwelcome glimpse into life without the pair, and it wasn’t a very palatable one. Thankfully, the order bank for the two cars is as healthy as ever, and the initial “light at the end of a very, very long tunnel” – the chip shortage – has helped it accelerate builds, according to JLR chief financial officer Adrian Mardell. Better times lie ahead.
In the meantime, Land Rover Defender aside, there’s very little taking up the slack at JLR. The Land Rover Discovery and Range Rover Velar are both struggling; Jaguar is being wound down in its current form; and while not a cash cow, the Range Rover Evoque was typically JLR’s golden child and best-seller, driving volume and encouraging the firm to look at new niches to drive it towards that 1m goal, but demand is now flat and it’s only marginally outselling the (more profitable) Defender.
The old adage goes that small cars are just as expensive to develop as larger ones, yet you can charge less for them. JLR must be thankful that it didn’t pursue smaller models chasing ever greater volume, and it’s telling that its next three models are all of the large, expensive and thus profitable ilk: Range Rover, Range Rover Sport and Land Rover Defender 130.
For a company where financial jeopardy never seems that far away, it’s understandably following the money.
Mark Tisshaw, editor