Inside The Industry - ARTICLE - MARCH 2021

Jaguar Land Rover Set Out Their Future 

Only two days after I finished last month’s article JLR’s new boss Thierry Bollore announced his “Reimagine” plan for the future. So at least I’ve had some time to look at in detail, gauge a few reactions and add some additional information. Just as interesting as what was said was what wasn’t said. 

For Land Rover it’s pretty well “as you were”, they will concentrate on premium market SUVs at which they are of course excellent (reliability apart perhaps?) and produce good profits for the manufacturer and their dealers. Jaguar though will be going in a new and different direction. M. Bollere has realised the total stupidity of spending millions developing Jaguar versions of Land Rover products to compete for the same customers around 90% of whom would no doubt have been happy with an Evoque or a Velar if the E-Pace and F-Pace didn’t exist. So no more Jaguar SUVs pretty soon. Makes perfect sense to me. 

What is less clear is what Jaguar WILL offer. It’s certain that by 2025 everything they offer will be 100% electric, so with the exception of the I-Pace all the current range will be gone by then. I-Pace (please pay attention at the back) is a “Crossover” not an “SUV” so OK as a Jaguar in the brave new world. Hydrogen will be looked at for the future particularly for the larger LR products. Jaguar will move upmarket to offer “the most desirable vehicles for discerning customers”. No longer will Mercedes and BMW be Jaguar’s targets, but Aston Martin and Bentley. For both of these their best seller is now an SUV of course but it’s up to Range Rover to tackle that bit. 

So if Jaguar is not to make SUVs, and only make electric cars what can they offer. Only saloons and estate cars plus sports cars. An electric F-Type is being considered but not yet approved. After a £300M investment the new all electric XJ is just about ready for launch but they’ve cancelled it? This is exactly the type of car Jaguar will sell from 2025 but apparently it “doesn’t fit with the new positioning”. Surely when all that money has been spent and the car is good to go why not start selling it? The old one has ceased production so the brand that is moving to challenge Aston and Bentley now has the ageing XF as its flagship? 

Although it’s admitted that Jaguar will make fewer (you could say even fewer) cars in the future no production plants will close. The Birmingham Castle Bromwich factory currently makes XE and XF models and was to make the electric XJ. We now know XE and XF will cease in 4 years, and frankly it would be a brave man who would suggest these models already struggling will do anything but lose sales now everyone knows they are doomed and will soon be yesterday’s cars. Then there is talk of consolidating different JLR business currently scattered across the Midlands? And of course whatever electric cars they make in the future, but with the aim of approximately doubling the average transaction price volumes must be much lower than with a range starting below £40000. It’s not beyond the bounds of possibility that Castle Bromwich will become a battery factory – they will need one. 

Amazingly given the eye watering costs of developing the platforms on which cars sit JLR are to develop different platform for the two brands! They say that is so the two have distinct characteristics, but VW Group the masters of platform sharing have already proved you can put an Audi, a Bentley, and a Porsche on the same platform and keep the models individual. In fact VW have just announced that they are developing a new platform which will be scalable so one platform will form the basis of ALL their electric cars, everything form a small Skoda to a Bentley SUV. Developing separate platforms for the very limited volumes Jaguar will produce in the future will be incredibly expensive. Why? Some suggest it means the two brands are more separate so that Jaguar could be more easily sold off in the future, perhaps not a silly idea. JLR have themselves recognised the problem and are already seeking a partner to develop their electric cars on. Either a third party to simply buy a platform from or a partner to share development costs with. So it won’t be pure Jaguar? They insist that partner can’t be Land Rover because the two ranges will be so different in the future. 

So what do dealers and owners think? I’ve talked to a few and from the Jaguar side enthusiasm is shall we say limited. The dealers, most of whom have made very significant investments in both parts of the franchise in recent years, can see it will be hard work selling new Jaguars for the next few years when everyone knows the cars on offer will soon be obsolete. So unless Jag turn the volumes right down significant discounting will be needed to move the metal. Hardly what you want when you’re seeking to move into Bentley territory. And of course when you move the price points that far up the scale you inevitably leave your existing customers behind. The person who can afford a £45000 car can’t afford a £100,000 car. So you say farewell to the £45000 customer unless you can sell him a Land Rover and you have to fight to win over loyal Aston Martin and Bentley customers. Not that their manufacturers and dealers will give in easily. 

Finally for the dealers it is glaringly obvious that while Aston Martin and Bentley each have 20-30 dealers in the UK Jaguar have around 100. Surely there isn’t a business case for that so most will become Land Rover only. However the LR future looks much more assured. I’ll try to cover that next time. 

For the customers many of whom hold Jaguar and its heritage with great affection the blunt fact that is they are a £45000 customer they shortly won’t get halfway to a new Jag is not well received shall we say. Not good for Jaguar staff either, 2000 have already been told they will become redundant.  

Jaguar are determined their new ranges will be “simply stunning”. They will need to be!  

Aston Martin Sets Out Future Plans, Axes Jobs 

Perhaps unaware that Jaguar were about to target them, Aston have been setting out their own future plans having been bought last year by a consortium led by Canadian billionaire Lawrence Stroll. Last year Aston sold 4150 cars of which 1171 were the new DBX SUV model. That was a drop of 32% on 2019 and a loss of £460M resulted. Under their new plan to company intends to sell 6000 cars this year building to 10000 cars a year by 2025 and make a profit of £500M. Most of the growth is expected to come from more versions of the DBX to be launched and perhaps a smaller SUV. The Valhalla supercar to be launched in 2023 will now have a Mercedes AMG engine rather than a bespoke new V6 which will save literally millions. 

200 jobs are to go from the Welsh factory that was opened last year to build the DBX. This has caused a furious row with the Welsh Government who provided millions in grants to ensure that the investment, and the jobs, came to Wales.  

Market Report 

Well with the showrooms closed and people told to stay at home no surprise that February UK new car sales were 35% down on last year bringing the year’s total to 38% down so far. February is always a small market of course before the new plate arrives in March, traditionally the biggest market of the year, until this year of course. To the dismay of the industry car dealers aren’t allowed to re-open for showroom sales until mid April at the earliest. Click and collect sales are OK and the all important test drive is a grey area. 

Dealers and manufacturers had all hoped that with the vaccination programme going so well opening the showrooms at least sometime in March would happen so no doubt March will gain be around 35% down, maybe less because of course Lockdown 1 happened in late March last year and many people locked themselves down earlier without waiting for Government instructions. How much of the March impetus can be recovered in April and May remains to be seen. Dealers and manufacturers are determined to do as much as possible and everyone is clinging to the forecasts that there is a significant pent up demand and that many who have come out of the pandemic financially better off will be tempted to treat themselves to a new car. Certainly a recent What Car survey reported that almost 60% of those considering buying a new or used car currently intend to visit showrooms on April 12 or within a week of that date. Time will tell. Of course shortage of supply is still a problem. The semiconductor shortage hasn’t gone away, quite the opposite and that isn’t the only problem by any means. 

The bright spot is the van market, if you can get one that is. Sales of new vans in the UK in February were a staggering 22% up on last year, and lockdown hadn’t started last February. Pickups and large vans are the stars, the latter are 30% driven by the need for home deliveries now we don’t go to the shops any more. And these figures would be a lot higher were more new vans available. Typical waiting times are 4-6 months but some models are over a year. I had the unpleasant duty the other day of telling one of our customers I could get him a new Ferrari quicker than the VW vans he actually needed. Sadly he chose to wait for the vans! Used van prices as a result are just crazy and getting more expensive by the day. Never seen the like but supply and demand rule. 

 Used car business is down by a similar amount but I think there is more certainty there of the promised pent up demand. Dealer we know and supply are in the main busy building stock in advance of April 12th and there are few bargains about. I offered a Ford Dealer customer of ours two cars today, he told me they were far too expensive, half an hour later he came back and bought them both! 

Electric & Hybrid News 

 Last month I discussed depreciation in some detail, and I’ve just been looking at how alternative fuel cars perform on the used market. Expensive electric cars with long driving range like the bigger Teslas and the Jaguar I Paces are much in demand and fetch high prices. Smaller cars wilt limited range are less liked and lose more value in percentage terms. Less wealthy buyers are more concerned about a possible big unplanned expense in terms of replacing batteries. The biggest shock has been a rapid and significant fall in the value of used hybrids. This is partly because of lack of demand from private hire drivers as far less people are using taxis. It seems that every Uber driver in London has a Toyota Prius, with few customers they are certainly not in a mood to replace their cars just now. Also from October this year plug in hybrids will no longer be exempt from the £15 per day London Congestion Charge. It’s interesting that with sales of new diesel cars dropping dramatically over the last few years there is now a severe shortage of these and they remain in strong demand in rural areas so prices are very strong and likely to rise further.

    Ford have announced that by 2030 all their cars sold in Europe will be pure electric with no hybrids at all. And by 2024 they will offer an electric and/or hybrid option for every car on the range. However they see diesels lasting much longer in the van market and good news is they have confirmed the Dagenham engine plant will continue to produce diesels for Transit vans for the foreseeable future.

   With perhaps more attention than ever on the national finances everyone seems convinced that the introduction of some form of road pricing is a question of when not if. Every new electric car sold contributes around £1000 less to the exchequer in it’s first year in terms of road tax and fuel duty than a petrol or diesel, and of course that continues in subsequent years. If forecasts are right around 175,000 electric cars will be sold in the UK this year leaving the Chancellor £175M worse off. Then you have to add the Government Grants of £3500 per car currently on offer to encourage buyers to go electric. For sure this can’t last.

 The cost of recharging an electric car at public charge points is also coming under scrutiny. Prices vary widely but a recent study based on recharging a BMW i3 from 10% battery to 80% showed a typical cost using a home charger of £7.25. The cheapest public charging point would cost £9.32, the most expensive £40.66!

 The National Infrastructure Commission, which advises the Government, has called for diesel lorries to be banned from 2040. This in spite of the fact that no zero emission trucks currently exist. Apparently their view is that if this ban is announced it will stimulate the industry to develop the required trucks whether they be electric or hydrogen. In my view unless there are big developments in battery technology hydrogen is the only answer available at the moment.

 Hyundai are recalling 82000 electric cars and 300 electric buses because of fires linked to batteries. The cost is estimated at £640M. The battery manufacturer has insisted it is not to blame and that Hyundai had failed to follow their instructions for setting up the fast charge system.

 United States currently has 100,000 electric car charging points, far more than our 35000. The new President recently announced that as part of his economic stimulus plans this would rise to “at least” 500,000 by 2030.

   It seems that not all new hybrid cars will be able to be legally sold from 2030 to 2035. The Government is to impose a minimum range on electric power for them to qualify. At the moment some hybrids can travel no more than 15-20 miles before switching to petrol. Although a figure hasn’t been set yet it appears it will be significantly higher than that.


Renault To Sell It’s Stake In Mercedes. 

I must admit that until I read of this I didn’t know that Renault owned 1.5% of Daimler. The resulting funds of almost £1 Billion will come in extremely useful when vast investments are required to design and develop electric cars.  

All Electric Volvos To Be Sold Online 

Volvo have announced that all their pure electric cars will be sold online using the agency model so customers will deal with the manufacturer at a set price with dealer responsible for assisting the customer to decide their ideal specification, providing test drives, vehicle preparation and handover etc. Dealers will receive an undisclosed fee for doing all this, rumours say typically 3% of the price of the car perhaps. Volvo have said that their dealers “remain a crucial part of the customer experience and they will continue to be responsible for a variety of important services such as preparing, delivering and servicing cars.” 

Volvo also stressed their dealers had “welcomed the news”. One Volvo dealer I know who’s just spent £2M on a new facility for the brand expressed a rather different opinion and not one I can publish here!