Like JLR Stumbles, some Jaguar models could face the ax



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Jaguar XF Sportbrake (Photo of Getty Images for Jaguar)

Jaguar Land Rover (JLR), a manufacturer of British-owned and British-owned luxury vehicles, is to take urgent action to modernize its business plan, as rising costs reduce profits, said analysts.

And they added that Jaguar has too many models to compete effectively with the Germans and that JLR has to find a partner to share the development costs.

That was the verdict after JLR's parent company, Tata Motors, announced its results for the first quarter ended June 30th.

JLR recorded a loss of 264 million pounds ($ 343 million), compared to a profit of 571 million pounds ($ 742 million) in the same period last year. Sales decreased 6.7% to 5.2 billion pounds ($ 6.8 billion)

European carmakers are facing difficult problems.

Jaguar F-Type (AP Photo / Jae C. Hong)

In the short term, they have to move quickly from diesel engines to gasoline engines because oil burners are falling out of favor with the general public. Politicians from all over Europe have drawn attention to the danger that old diesels pose to public health. Diesel's market share is expected to increase to 42% by the end of 2018 in Germany, the largest market in Europe, compared with 52% in 2015. Last year, 90% of JLR sales in Great Britain, its biggest market, were diesel.

Then there is the turmoil in China over tariffs, and Britain leaves the European Union (EU) on March 30th. If there is no agreement between Britain and the European Union. on frictionless trading, this could blow up a big hole in JLR's manufacturing scheme. At present, the pieces are crossing unhindered borders across Europe.

And if that is not enough, European automakers will have to comply with the new fuel economy regulations designed to ban current practices that allow companies to use computers in perfect scenarios to declare fuel economy . This often leads to exaggerations of more than 30%, on the road. The decreasing share of gasoline-powered diesel engines will also complicate the task.

As a marginal manufacturer in the high-end world led by BMW, Mercedes, Audi and Porsche, JLR is watching the hurricane. And Jaguar has too many models, according to Professor Ferdinand Dudenhoeffer of the Center for Automotive Research (CAR) of the University of Duisberg-Essen in Germany.

Range Rover Photographer: SeongJoon Cho / Bloomberg

Dudenhoeffer said Jaguar had 6 models (with the exception of the latest i-Pace electric vehicle) – the XE, XF and XJ sedans – which rival the BMW 3, 5 and 7 – two SUV – the F-Series. and E-Pace and the two-seat F-Type. Jaguar sold 180,000 vehicles last year, the equivalent of an average of 30,000 vehicles.

"This is not a good business model. They need more sales by model or they have to delete models. You can not compete with BMW or Mercedes with only 30,000 sales per model, "said Dudenhoeffer.

He said JLR was too weak in China, despite its manufacturing, and had invested too much in diesel and not enough in hybrid vehicles, gasoline engines and electric vehicles.

Autopolis analyst John Wormald agrees that Jaguar can not really compete with the Germans, although the Land Rover operation offers more profit potential.

"Jaguar, despite the quality of its products, is simply too small to compete with BMW, Mercedes and Audi. with which it is roughly in the same price class, as measured by the ability to charge a premium on a car of equivalent volume. Yes, there is the problem of diesel, but they are all faced with that. Jaguar has just never been so far in the continental European market, which is a big part of the global market for this type of car, "Wormald said.

Electric vehicle Jaguar i-Pace. Waymo self-driving pioneer will purchase up to 20,000 i-Paces to help realize its vision of a robotic driving service. (AP Photo / Mark Lennihan)

"Conversely, Land Rover is pretty unique. Not in the traditional farm / military vehicle – the real hard off-road – where it does not have the scale of Japanese or Americans. But in his SUVs, where he is the only real high-end producer, with little competition other than that of Jeep, and that is not very solid, he can really raise prices, the BMW and Mercedes offers not being as distinctive as their cars. "The expensive mouth water, the New York Times called one of its products, "Wormald said.

Robin Zhu, an analyst at Bernstein Research, agrees that urgent action needs to be taken, starting with cost reduction goals.

"We believe that JLR would benefit from the discipline imposed by the state-defined cost targets and the empowerment of a" hatchet man, "Zhu said.

"JLR's fixed costs continue to grow faster than sales. JLR seems particularly exposed to several major challenges in the coming years and will have to make difficult decisions regarding the product, the costs and the capital expenditures, in our opinion, "said Zhu.

Dudenhoeffer, of CAR, said JLR needed to put in place agreements to share design, engineering, production and component procurement with other automakers, like Volvo with Geely in China.

"They have to focus on China, they have to look at the costs, they have to focus on Jaguar. In the past, strong growth has allowed his company to succeed. Now, growth has slowed. Electric vehicles need a wide platform. JLR must think about a modified economic model ", Dudenhoeffer said.

JLR declined to comment.

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Jaguar XF Sportbrake (Photo of Getty Images for Jaguar)

Jaguar Land Rover (JLR), a manufacturer of British-owned and British-owned luxury vehicles, is to take urgent action to modernize its business plan, as rising costs reduce profits, said analysts.

And they added that Jaguar has too many models to compete effectively with the Germans and that JLR has to find a partner to share the development costs.

That was the verdict after JLR's parent company, Tata Motors, announced its results for the first quarter ended June 30th.

JLR recorded a loss of 264 million pounds ($ 343 million), compared to a profit of 571 million pounds ($ 742 million) in the same period last year. Sales decreased 6.7% to 5.2 billion pounds ($ 6.8 billion)

European carmakers are facing difficult problems.

Jaguar F-Type (AP Photo / Jae C. Hong)

In the short term, they have to move quickly from diesel engines to gasoline engines because oil burners are falling out of favor with the general public. Politicians from all over Europe have drawn attention to the danger that old diesels pose to public health. Diesel's market share is expected to increase to 42% by the end of 2018 in Germany, the largest market in Europe, compared with 52% in 2015. Last year, 90% of JLR sales in Great Britain, its biggest market, were diesel.

Then there is the turmoil in China over tariffs, and Britain leaves the European Union (EU) on March 30th. If there is no agreement between Britain and the European Union. on frictionless trading, this could blow up a big hole in JLR's manufacturing scheme. At present, the pieces are crossing unhindered borders across Europe.

And if that is not enough, European automakers will have to comply with the new fuel economy regulations designed to ban current practices that allow companies to use computers in perfect scenarios to declare fuel economy . This often leads to exaggerations of more than 30%, on the road. The decreasing share of gasoline-powered diesel engines will also complicate the task.

As a marginal manufacturer in the high-end world led by BMW, Mercedes, Audi and Porsche, JLR is watching the hurricane. And Jaguar has too many models, according to Professor Ferdinand Dudenhoeffer of the Center for Automotive Research (CAR) of the University of Duisberg-Essen in Germany.

Range Rover Photographer: SeongJoon Cho / Bloomberg

Dudenhoeffer said Jaguar had 6 models (with the exception of the latest i-Pace electric vehicle) – the XE, XF and XJ sedans – which rival the BMW 3, 5 and 7 – two SUV – the F-Series. and E-Pace and the two-seat F-Type. Jaguar sold 180,000 vehicles last year, the equivalent of an average of 30,000 vehicles.

"This is not a good business model. They need more sales by model or they have to delete models. You can not compete with BMW or Mercedes with only 30,000 sales per model, "said Dudenhoeffer.

He said JLR was too weak in China, despite its manufacturing, and had invested too much in diesel and not enough in hybrid vehicles, gasoline engines and electric vehicles.

Autopolis analyst John Wormald agrees that Jaguar can not really compete with the Germans, although the Land Rover operation offers more profit potential.

"Jaguar, despite the quality of its products, is simply too small to compete with BMW, Mercedes and Audi. with which it is roughly in the same price class, as measured by the ability to charge a premium on a car of equivalent volume. Yes, there is the problem of diesel, but they are all faced with that. Jaguar has just never been so far in the continental European market, which is a big part of the global market for this type of car, "Wormald said.

Electric vehicle Jaguar i-Pace. Waymo self-driving pioneer will purchase up to 20,000 i-Paces to help realize its vision of a robotic driving service. (AP Photo / Mark Lennihan)

"Conversely, Land Rover is pretty unique. Not in the traditional farm / military vehicle – the real hard off-road – where it does not have the scale of Japanese or Americans. But in his SUVs, where he is the only real high-end producer, with little competition other than that of Jeep, and that is not very solid, he can really raise prices, the BMW and Mercedes offers not being as distinctive as their cars. "Mouth to mouth expensive, the New York Times called one of its products, "Wormald said.

Robin Zhu, an analyst at Bernstein Research, agrees that urgent action needs to be taken, starting with cost reduction goals.

"We believe that JLR would benefit from the discipline imposed by the state-defined cost targets and the empowerment of a" hatchet man, "Zhu said.

"JLR's fixed costs continue to grow faster than sales. JLR seems particularly exposed to several major challenges in the coming years and will have to make difficult decisions regarding the product, the costs and the capital expenditures, in our opinion, "said Zhu.

Dudenhoeffer, of CAR, said JLR needed to put in place agreements to share design, engineering, production and component procurement with other automakers, like Volvo with Geely in China.

"They have to focus on China, they have to look at the costs, they have to focus on Jaguar. In the past, strong growth has allowed his company to succeed. Now, growth has slowed. Electric vehicles need a wide platform. JLR must think about a modified economic model ", Dudenhoeffer said.

JLR declined to comment.