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Jaguar Land Rover takes $4.4B hit, writes down value of cars, plants

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Jaguar Land Rover takes $4.4B hit, writes down value of cars, plants

Staff & Wire Reports ...https://www.autonews.com/automakers-suppliers/jaguar-land-rover-takes-44b-hit-writes-down-value-cars-plants

February 07, 2019 11:52 AM 13 hours ago

Jaguar Land Rover has posted a 3.4 billion pound ($4.4 billion) quarterly loss after it took a big write-down in the value of its cars and plants.

It is the third straight quarterly loss for the British automaker, which has been hit hard by U.S.-China trade tensions, low demand for diesel cars in Europe and Brexit worries. Last month JLR said it would cut about 10 percent of its 42,500-person workforce, mostly in its home market.

JLR parent Tata Motors expects costs from the voluntary redundancy program to be recognized in the quarter ending in March.

The write-down during the quarter ending in December was a 3.1 billion pound ($4 billion) one-time non-cash charge, the company said.

It was taken after some of the automaker's newest models saw steep falls in demand.

JLR's global sales were down 6.4 percent to 144,602 units during the quarter. Net revenue was also down 1 percent to 6.2 billion pounds ($8 billion) during the quarter.

"Overall performance continued to be impacted by challenging market conditions in China," said JLR CEO Ralf Speth. "We continue to work closely with Chinese retailers to respond to current market conditions with a pull-based approach to vehicle sales."

JLR is also battling waning demand for diesels, which account for the vast majority of Jaguar's and Land Rover's sales in Europe.

Full article at link.......

 

Since leaving Ford, Jaguar has made money selling in an upbeat global economy, now it's starting to face a few headwinds and things are looking not so great...

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Uh oh....don't tell T-Sta....err, I mean rperez817 about this.

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This is a good reminder how sharply the North American market can diverge from the world's other two large auto markets: Europe and China. Actually, we all here already know this because that is how Ford has stayed in business...

But back to the JLR story, if all you looked at was North American sales you would think the automaker was booming, with Jaguar's three hot-selling SUVs (one of them an all new battery electric) and the imminent arrival of Land Rover's revived Defender model likely to make things here even stronger. See:

http://carsalesbase.com/us-car-sales-data/land-rover/

and

http://carsalesbase.com/us-car-sales-data/jaguar/

But demand for diesel, JLR's traditional "over there" bread-and-butter drivetrain, is cratering in Europe, China car sales (and the China auto market overall) are down, and over half of all JLR Europe sales are tied to the home market, Britain, which has this little uncertainty of Brexit ongoing...

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If they write down the value of the cars, are they still considered a "luxury" car? Asking for a friend...

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2 hours ago, Gurgeh said:

But demand for diesel, JLR's traditional "over there" bread-and-butter drivetrain, is cratering in Europe

JLR's diesel woes also affect U.S. and Canada. When they introduced Ingenium diesel engines for Jaguars and Land Rovers in U.S. and Canada, initial sales were strong. But then sales of the diesel models went down a lot around mid to late 2017 and never recovered.

My local dealer (Autobahn Jaguar Fort Worth) had 8 diesel Jaguars in its new car inventory when I bought an XF 20d diesel demo car from them in 2016. Since 2018, they usually had only 1 or 2.

Diesel engine for cars is a lost cause now for all automakers, all regions. It's sad because the latest diesel engines like JLR Ingenium are amazingly efficient and powerful. But there's no going back. Electric drive is the future. Tata and JLR are focusing on that. 

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All these losses are also linked to the collapse of XE, XF, XJ sales under Jaguar. Looks like another brand is having a problem with sedans.

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3 hours ago, rperez817 said:

JLR's diesel woes also affect U.S. and Canada. When they introduced Ingenium diesel engines for Jaguars and Land Rovers in U.S. and Canada, initial sales were strong. But then sales of the diesel models went down a lot around mid to late 2017 and never recovered.

My local dealer (Autobahn Jaguar Fort Worth) had 8 diesel Jaguars in its new car inventory when I bought an XF 20d diesel demo car from them in 2016. Since 2018, they usually had only 1 or 2.

Diesel engine for cars is a lost cause now for all automakers, all regions. It's sad because the latest diesel engines like JLR Ingenium are amazingly efficient and powerful. But there's no going back. Electric drive is the future. Tata and JLR are focusing on that. 

Holy crap...a statement of JLR's failings without blaming Ford...who are you and what have you done to rperez817??

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42 minutes ago, RadicalX said:

All these losses are also linked to the collapse of XE, XF, XJ sales under Jaguar. Looks like another brand is having a problem with sedans.

Yes, which is why JLR are planning, so I hear, to transition Jaguar over to a (nearly) all-electric automaker within just a few years.

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2 hours ago, Gurgeh said:

Yes, which is why JLR are planning, so I hear, to transition Jaguar over to a (nearly) all-electric automaker within just a few years.

As if going electric will fix their problems.

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This is why I think it's so hard to manage true luxury brands these days, staying in front of a changing market with regularly refreshed products and new vehicle designs would test the mettle and patience of any major investor. J/LR just felt the branch crack and we haven't even entered a full blown recession...old man Tata bought J/LR for  the prestige of owning  those storied luxury brands but, he might find himself or Tata steel having to carry the brands in bad times...just like terrible old interfering Ford did

Edited by jpd80

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6 hours ago, mackinaw said:

As if going electric will fix their problems.

Going electric is necessary for JLR to survive in the next decade. But not sufficient. They have to become more agile in other areas too. Parent company Tata has always trusted JLR management to make their own decisions. JLR management will have to prove they can make the right decisions and make them quickly.

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On 2/9/2019 at 2:06 PM, rperez817 said:

Going electric is necessary for JLR to survive in the next decade. But not sufficient. They have to become more agile in other areas too. Parent company Tata has always trusted JLR management to make their own decisions. JLR management will have to prove they can make the right decisions and make them quickly.

Tata is now in the position Ford once was, J/LR management likes to fold all profits back into growing the brand, it was something that Ford came to realize over time - that if it invested the $11 billion into J/LR and kept the brands, it still wouldn't have seen a cracker of that today.

but worse than that, in a deflating sales market, J/LR's funding costs become a real headache to manage without lots of bad PR hurting the image of the brand...

Edited by jpd80

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Is incredible that a luxury SUV brand, like Land Rover is in red. What the market want? SUVs and crossovers! And the most profitable are the luxury ones. Land Rover have a complete line up of premium (Discovery line) and luxury (Range Rover line) SUVs and Crossovers. So, the bad management of the company must be  the cause of this situation.

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8 hours ago, falconlover 1 said:

Is incredible that a luxury SUV brand, like Land Rover is in red. What the market want? SUVs and crossovers! And the most profitable are the luxury ones. Land Rover have a complete line up of premium (Discovery line) and luxury (Range Rover line) SUVs and Crossovers. So, the bad management of the company must be  the cause of this situation.

Not necessarily, you can have a great showroom and buyers just go off the boil, it's actually far more risky to invest in luxury brands, Ford set JLR free in an up market with an owner who agreed to fund its product cycle, now the market is slowing and we're seeing the vulnerability of the brands.

Part of the issue is the changed emphasis on smaller less costly product, almost all of J/LR's sales growth has come in these lower segments where traditionally, the brands would sell almost exclusively larger, more expensive vehicles. It's a perplexing problem for JLR as those full showrooms of continually renewed products are coming at one heck of a cost to maintain...and now it wants to switch attention to electric  vehicles

Edited by jpd80

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JLR is not big enough to justify the capital investment. But growing volume is not easy and this is where JLR finds itself now... in the middle of the deathzone. Too small to cover fixed cost but too big to make a profit.

Tata really needs to decide what it wants out of JLR. If this is a vanity project then fine... just periodically write off your investments. But if they want this to be a real business, they need to decide if they want volume or boutique.

The volume strategy will require massive downscale vehicle investments and platform/drivetrain/parts sharing with other Tata models. The goal would be to turn Jaguar and Land Rover into high volume middle market brands while leaving Range Rover as the luxury offering.

The boutique strategy will require abandoning the middle market and the entry luxury segment altogether and just focus on the high end Range Rovers and one or two ultra lux Jaguar sedans and sports cars.

Edited by bzcat

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Land Rover has the brands to make their business profitable: Range Rover: luxury.  Land Rover/Discovery/Defender: premium.  The premium brands need to grow in volume and make the company sustainable in the time. The platforms for Land Rover must be shared with others Tata brands... otherwise, will fail.

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