The year 2015 is going to be absolutely crucial for the success of Jaguar Land Rover and the wider Midlands motor industry. Can JLR continue its global advance in the face of the challenges ahead for the global economy? Can it make the breakthrough into the small car segment dominated by the major automotive manufacturers?
The stats to date are quite amazing. For the financial year to March 2014, the company reported full-year pre-tax profits of £2.5bn, with revenues of £19.4bn. The Midlands’ biggest manufacturer revealed global turnover was up by 9% in 2014, with 462,678 vehicles sold. Land Rover celebrated a record year with 381,108 vehicles while Jaguar sales were 81,570.
The aim is to produce one million cars by the end of the decade. A heady prospect indeed but, if anybody can pull it off, JLR can. After all, since 2009, the company has undergone a period of unprecedented growth, doubling output on the back of a raft of exciting new models. JLR now employs around 30,000 people globally and supports around 190,000 more through dealerships, suppliers and local businesses.
All its vehicles are engineered and designed in Britain and, despite the ambitious plans for global growth, the heart of the business remains in the UK.
The firm has invested billions of pounds – more than £10bn in the last five years – in modern production, research and development facilities. In fact, it’s the biggest UK investor in R&D in the manufacturing sector and is in the global top 100 for R&D spend. Selling to more than 170 countries, JLR is now one of the largest exporters by value in the UK, with 80% of vehicles produced in the UK being sold abroad. Yet JLR is still a small company. Its competitors Audi and Mercedes are four or five times as big. And the world situation is going through dynamic change. The Chinese economy is on a downward trend and all over currencies and markets are volatile. The automotive sector is facing issues – the development of electric cars and hybrids while at the same time coping with new regulations.
Future technologies are such that a huge amount of R&D is needed. With an enormous amount of help from Tata, there has been a remarkable turnaround at JLR. All credit to
those at JLR and especially to Dr Ralph Speth, who is one of the best chief executives in the country. Yet these are early days. But for Tata there wouldn’t be an R&D driven UK car industry left. But we got them here and it effectively saved the automotive industry in this country from complete destruction.
When Tata came to the UK in 2008 there were a lot of question marks about the Castle Bromwich factory which was destined to be closed. It has been kept open and the newest models are being built there – also at Solihull and Halewood. A lot of investment has gone in to make that happen. Huge amounts of investment are required to produce competitive vehicles. It nearly never happened because Tata almost walked away after the Labour Government set out tough terms for financial help at the height of the banking crisis and economic downturn, but stayed the course and is now reaping the benefits.
Tata has embraced corporate responsibility – thousands of new jobs, many more apprentices, helping schools to understand engineering, funding people to do university degrees, establishing University Technical Colleges at WMG and Solihull, getting involved with top universities. Indeed there is a symbiotic relationship between JLR and the social environment in which company employees live. JLR takes that very seriously.
They have single-handedly changed the image of the manufacturing industry in this country. The benefit has been felt across the supply chain. But there remains a long way to go and many hurdles. Such as wage costs – we in the UK are in danger of becoming uncompetitive. JLR was disappointed at the way the recent pay settlement was conducted – in the glare of the newspapers and 24:7 instant headlines. Other countries such as the US, Canada, Turkey and Austria have made lucrative offers designed to attract the company – they are not hamstrung by state aid restrictions as in the UK. JLR is re-thinking its direction – it is at a crossroads.
2014 saw a number of highs. Models like the Evoque have captured the public imagination, and both the Discovery Sport and Jaguar XE have been unveiled. The group’s vital new £500m engine factory was launched at the i54 site near Wolverhampton. The plant, the size of 14 football pitches, is JLR’s largest investment for in-house engine design and manufacturing in a generation. It will be home to the new ‘Ingenium’ range of engines that will underpin the upcoming generation of both Jaguar and Land Rover products, starting with the XE saloon.
The first XEs will roll off the production line with these engines this year, for deliveries in May. JLR opened its first plant in China – it will produce three JLR models by 2016 – in partnership with local firm Chery Automobile Company. The factory is part of a 10.9bn yuan (£1.1bn) investment and is located in the eastern Chinese province of Jiangsu, north of Shanghai. It has a planned production capacity of 130,000 cars in its first year. The first model to roll off the line will be the Evoque, JLR’s most popular vehicle in China.
Since its launch, one in five Range Rover Evoques have been sold there. China is JLR’s largest single market. More than 100,000 vehicles were sold in the country in the financial year ending March 2014. And the worldwide expansion goes on. A new £240m plant in Brazil is set to come on line in 2016, capable of producing 24,000 vehicles a year.
JLR has been eyeing up locations in the southern United States and Saudi Arabia. Meanwhile, back at home, 2015 opened with the announcement of around 1,300 new jobs with a new Jaguar car, its first 4x4, described as a practical five-seater, an SUV crossover, to be built at the Land Rover factory in Solihull for launch in 2016. It will cost around £38,000. Named the F-PACE, it will go up against the Porsche Macan and the BMW X4.
Perhaps the biggest challenge for this year is ensuring the new baby Jag is a hit with the car buying public. JLR’s development to date has largely been based on Land Rover – it far outsells Jaguar. The new 2015 Jaguar XE marks the brand’s return to the compact executive car segment, probably the most competitive sector worldwide, in which the likes of the BMW 3 Series, Audi A4 and Mercedes C-Class traditionally hold sway. The Jaguar XE’s public debut came at the 2014 Paris Motor Show in October. Prices started from £26,995.
The public unveiling of the XE came off the back of a star-studded launch event in London which Jaguar trailed by flying the car over the city by helicopter at sunset. No expense was spared in making sure the new XE arrived with a bang. The Jaguar XE is the result of around £1.5bn worth of investment in a new factory within Land Rover’s Solihull plant, and JLR is expecting big things from its newcomer in terms of sales impact.
Arguably it is the group’s most important model ever. I believe it will meet the test, battle the opposition head on and sell well. Jaguar needs a big seller. Hopefully it will be seen as the spiritual successor to the Mark II Jaguar (as driven by Inspector Morse) built in the Midlands in the 1960s.
In the wider automotive sector, UK car sales rose 9.3% year-on-year overall in 2014 to reach a 10-year high of 2,476,435 units. Jaguar was up 13.52% and Land Rover ahead 2.74%. Of the Midlands minnows, Aston Martin declined 6.7%, although this equated to just 62 cars, while Longbridge-based MG, the Chinese-owned brand, saw an overall rise of 361.5% – however volumes remained small at 2,326 compared to 504.
Interestingly, 2014 saw a remarkable surge in demand for ultra-low emission vehicles (ULEVs). Registrations of plug-in cars increased four-fold from 3,586 in 2013 to 14,498 in 2014. Overall, around 80% of UK-built vehicles are exported, and UK car-making boasts £60bn annual turnover. Meanwhile, pundits believe low inflation, low interest rates and high employment will produce a strong 2015 domestic market.
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