Jaguar Land Rover Shifts Into Lower Gear in Tougher China Market

A Jaguar on display in the Forbidden City in Beijing. (Weibo/Jaguar) Following years of breakneck growth in China’s relatively young but vitally important luxury auto market, recent signs suggest Jaguar Land Rover is hitting a rough patch. After reporting poor results for the fourth quarter of fiscal year 2014-15, Jaguar Land Rover appointed Mark Bishop, former managing director of Porsche China, to lead its sales efforts in a tougher China market. This week’s appointment of Bishop as JLR’s sales director in China follows an announcement by the automaker that it would revise its commercial policies in China to help dealers in the country. The company’s demand for cars fell 20 percent and profits fell by 32.7 percent between January and March in China. According to some sources, Jaguar Land Rover may cut its sales targets in China for the second quarter of 2015 by “10 to 20 percent,” owing to weak demand. China difficulties aren’t unique to JLR. Beijing’s ongoing anti-corruption drive has bit into profits for most major foreign automakers, and although stalwarts like BMW continue to post decent sales growth in China—6.4 percent in the first quarter of 2015 in BMW’s case—most are warning of slower growth in 2015. Slower sales in China should be of serious concern for JLR, which has invested heavily in the country in recent years, and has seen China account for approximately 25 percent of its total annual sales. Last year, the automaker sold 122,010 vehicles in China, out of a global total of 462,678. Although the usual culprits, among them the anti-corruption campaign, have been indicated in JLR’s recent slowdown, other areas of concern include a smear piece during the recent Consumer Rights Day. JLR’s challenges also include recent reforms on the part of major cities like Beijing, Shanghai, and Shenzhen to cap carbon emissions. As part of these efforts, cities are limiting the number of new license plates to be issued to new vehicles, and Beijing recently announced plans to reduce congestion by making residents prove they have access to a parking spot before purchasing a car by 2016. In response to a tougher market, JLR has already resorted to price cuts, reducing the price of three models—the Jaguar F-Type Cabriolet, Range Rover 5.0 V8, and Range Rover Sports 5.0 V8. Despite these cuts, Land Rover and Jaguar remain more expensive than comparable models from rivals Audi and Mercedes-Benz. Despite its difficulties, JLR remains in relatively good position to see improvement in the near term. The automaker is rolling out its China-made Evoque, manufactured at its facility in Changsu, a joint venture with Chery, and has recently made efforts to narrow the price gap between these locally made Evoques and competitor SUVs. As the negative effects of recent PR snafus—such as the Consumer Rights Day attack— fade, JLR may bounce back before we know it.

Jaguar Land Rover Shifts Into Lower Gear in Tougher China Market

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Published June 04, 2015

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Jaguar Land Rover Shifts Into Lower Gear in Tougher China Market