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Jaguar Land Rover Stare Into The Abyss After Posting $4.4 billion Loss

Jaguar Land Rover rusting away in the sales, 2019, dailycarblog.com

You would imagine that attaining regular and positive media coverage Jaguar Land Rover would be roaring into the sunset with a sales win-win. However, in many ways, the motoring press is a fantasy world. A positive review by a well-heeled motoring journalist doesn’t necessarily equate to more sales. Jaguar Land Rover is more complicated. And those complications increased last week when the Indian-British company posted a $4.4 billion quarterly loss. So what has gone wrong?

Remember that’s a quarterly loss. In one quarter $4.4 billion has been wiped off Jaguar Land Rover’s bank account. But this storm has been brewing for some time.

The biggest factor in Jaguar Land Rover’s quartely loss is China. The company’s biggest market has seen demand slump by 35 percent. This has been further complicated by a brewing trade war with the USA.

As such Chinese buyers, who represent the worlds biggest car market, have fled the brand. Jaguar Land Rover’s other problem is the dealership network within China.

Just 18 percent of outlets are in wealthy cities such as Beijing and Shanghai. Jaguar Land Rover will have to overhaul its current dealership strategy and increase brand awareness in order to stem this latest loss.

Other problems relate to the uncertainty surrounding Brexit and the financial impact it will have. Then there is the tightening of diesel emissions laws in the UK. As a result, Jaguar Land Rover sales have slumped.

Other factors include the so-called “Lindsey Dipple effect” although that is a fractional percentage of a very big problem.

Jaguar Land Rover’s other problem is maturing bonds. In layman’s terms, debt repayment which is due within one year. The company has to raise $1 billion USD to service the debt in full.

Jaguar Land Rover has cash reserves of around $4bn. Nevertheless, the company will continue to use unsecured loans as a means to bridge future finance.

In laymans terms, an unsecured loan is similar to a consumer credit card aggreement.

Yet another problem is misinvestment. Instead of preparing for an Electric Vehicle future the company invested £500 billion in new a diesel engine plant in 2014.

However, JLR is slowly moving with the times.

The Range Rover and Range Rover Sport are the only models offered with a Hybrid derivative. The new Range Rover Evoque will be offered with a mild hybrid later this year.

By 2020 Jaguar Land Rover say they will commit to manufacturing only hybrid and electric cars.

Jaguar has gone full-on electric. Albeit with the i-Pace, a fully electric compact car. Insiders claim Jaguar could be spun off into a fully electric luxury brand in a bid to keep sales from stalling.

Jaguar is the weakest link in the whole JLR chain. However, the biggest weakness comes from failing to embrace the future and being slow to respond to technological and changing consumer habits.

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