Across the wider reinvention of the JLR business, the biggest hurdle for the company to overcome is probably achieving its ambition to take much larger shares of the two most profitable market segments around the globe.
Of note is JLR’s intention to increase its EU share of the most profitable market segment (represented by the Range Rover luxury SUV) from 14% to 27% by 2026.
In the next most profitable sector, in which it fields the Velar, JLR is looking to boost its EU market share from 11% to 26% in 2026 and from 36% of the UK market to a huge 58%. It’s an aim that really would take the fight to BMW and Mercedes, and one that could represent JLR’s acknowledgement of Volvo’s success in driving upmarket.
The other big industrial move is for JLR to reduce its production break-even point. According to internal figures, JLR had a cash burn of £910 million in 2018, when investment in the MLA platform and new Defender was peaking at £5 billion. It needed to make 575,000 vehicles to break even but managed only 508,000.
However, JLR’s break-even point is said to be below 450,000 units this year and will further improve as Castle Bromwich goes offline and is repurposed, possibly for battery-related manufacture.
It is expected the launch of the new Range Rover and Range Rover Sport over the next 18 months will massively boost profits to help finance the engineering of the EMA architecture.
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Perhaps what they need to work on is the perception of quality rather than the quality itself, like the corner cutting that was obviously done on Jaguar interiors. I've said it before but here goes again: I've owned my Ingenium engined Discovery Sport since 2016 and nothing has gone wrong. Ever. Unlike the allegedly bulletproof Toyota I owned before that. Obviously, I realise that it's meant to be a piece of four wheeled tat with haunted electrics and a wheezy, uninspiring engine and I confidently expect it to fall apart at any moment as that is the received wisdom. In the meantime, it uncomplainingly does huge mileage every year and whisks me past those glorious BMWs and Mercedes I see with their hazards on in the hard shoulder. I'm sure that's just a blip. I'm not blindly admiring; the engine is thirstier than it should be and the transmission is slow witted but I guess I'm a very happy JLR customer. Just a shame that I don't think I'll be able to buy another one if they're going that far up market. Because I would if I could.
It's a tough ask to increase market share against a history of below par sales due to poor quality materials and build, with consequent higher than average depreciation.
Then couple that with the stated intent to increase prices and it usually means falling sales.
There's a lot of bold talk from JLR at the moment, but that is all it is. Let's see where they are in five to ten years time, before we start the congratulations.