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Jaguar Land Rover: JLR breaks its own sales records but company has some large problems looming

In 2016 Jaguar Land Rover reached its highest ever volume of sales. Already Britain’s largest vehicle manufacturer, the company hit sales of 584,313 vehicles in 2016 up by a fifth over the previous year. The company’s strength has always been its Range Rover marque, which is a prestige vehicle commanding high list prices but also high demand and Jaguar has largely been supported by its Range Rover bigger brother.

But recently Jaguars steady process of modernization has helped bolster the group’s sales. The group has ambitious plans but also a number of big problems to contend with. TATA motors, JLR’s Indian parent company, are struggling and have been for some time. Brexit and the financial implications of unfavourable exchange rates are already having an impact and these will only get worse, JLR relies very heavily on its North American and Chinese exports.In the European market, regulations on diesel are about to hit and JLRs vehicles will need to move to new power sources to remain competitive which could be very costly.

A continuing problem is what to do about the Defender, the company’s iconic 1950s vehicle on which production finally stopped after 68 years. What seems likely is that JLR will have to focus purely on its strengths in the luxury SUV market as it becomes squeezed by financial pressures over the next two years, meaning ambitious new projects may get sidelined.

JLR has had its greatest sales year ever in 2016, but the company is very likely to suffer from bad trading conditions and, while Brexit will provide some difficulties, the company has some latent issues that will exacerbate the problem. The transition from diesel, how to revive older brands, what markets to focus on and the utter reliance that its parent company has on it to provide revenue mean that JLR is likely to produce poor results before the end of the decade and not reach TATA’s target of one million vehicles sold annually.

For further reading please read our case studies and analyst insights on Jaguar Land Rover which can be found here:

http://advantage.marketline.com/Browse?q=Jaguar+land+Rover

 

Posted in Automotive.

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