Where did it all go wrong – again – for Jaguar Land Rover? Every year since 2011, JLR made more in annual profit than the A$2 billion it cost Ratan Tata to buy it from Ford back in 2008, saving it from its last major crisis.
Profits peaked at $4.8bn in 2015, thanks to strong new product, booming sales in China and the explosion in global demand for SUVs.
But in February JLR announced that it had lost a staggering $6.3bn in its third quarter alone, and is cutting 4500 jobs and $4.6bn in costs. It hasn’t announced its final loss for the full financial year, which ended in March, but annual sales are down six percent, and the decline accelerated in the final quarter.
Jaguar posted a three percent rise, but that’s only due to the addition of E-Pace and I-Pace. Every other model is down heavily.
Land Rover posted a nine percent decline despite the Velar making its first full-year contribution: the ageing Range Rover and Range Rover Sport were the only other Land Rovers to show an increase.
JLR has been caught in a perfect storm of slumping Chinese sales and uncertainty over both Brexit and the future of diesel. And it could get worse.
With the terms on which the UK will leave the European Union still unresolved, JLR may yet be hit by tariffs and delays on the parts it imports and the cars it exports. Add to that further expense in closing one of its factories in the UK. It confirmed in April that the new Defender would be built at its plant in Slovakia.
Of that huge loss, ‘only’ $500m was operational. The vast majority of the number – $5.8bn – was a write-down of capital investments made in previous years. Although sales have grown strongly under Tata’s ownership, they haven’t grown as fast as planned.
Privately, Tata and JLR’s board, led since 2010 by Ralf Speth, hoped to get JLR to a million cars a year, and they invested accordingly. JLR made huge operational profits for its owner, but Tata ploughed billions back into the business. With annual sales now dipping back below 600,000, the write-down is a public admission its plan hasn’t worked.
Like Ford, Tata tried to make Jaguar a rival to BMW and Mercedes...
Read the rest of this article in the June ‘19 issue of Wheels Magazine, on sale May 23.