When Tata, the Indian company known for the world’s cheapest car, took over British luxury brand Jaguar Land Rover, concern spread. However, profit and sales are up by a quarter.
British luxury car maker Jaguar Land Rover (JLR) is building profits fast, increasing turnover and launching crucial new models at an unprecedented rate.
The Range Rover Evoque will probably become the biggest-selling Land Rover model, and has received a near-rapturous press and public reception. Jaguar has just launched its four-cylinder diesel version of the excellent XF saloon, which will go head-to-head with the bestselling versions of the BMW 5-series and Audi A6 across Europe.
Jaguar has also committed itself to launching, next year, a new sports car smaller and cheaper than the XK. Those in the know say that it’s not retro, but it goes a long way to recapturing the desirability of the E-type. And after that comes a small Jaguar family car to tackle the huge BMW 3-series market.
Finally, in a display of confidence, Jaguar is taking orders for 250 examples of a supercar based on the styling of the C-X75 concept car that wowed the 2010 Paris motor show. Priced at a staggering £700,000, it’s going to be a highly fuel-efficient hybrid. The company is also committed to hybrid versions of its regular vehicles, starting with the all-new Range Rover, due in 2012.
Even without any of these new models, JLR’s annual report, issued this week, showed that in the year to March 31, revenues were up 51 per cent to £9.9billion, profit after tax up 24 per cent to just over £1billion, and vehicle sales up 26 per cent to 241,000. It employs 18,000, and is taking on 1,000 engineers this year.
Yet in mid-2008, when the company was taken over by its present owners Tata of India, commentators were largely pessimistic. People said boutique car companies needed the backing of huge conglomerates to get necessary purchasing economies and technological backing. JLR had been part of Ford, so could call on the parent’s environmental technology, or the safety research of fellow Ford subsidiary Volvo (now Volvo is Chinese-owned).
JLR’s main competitors, BMW and Mercedes, make more than a million cars a year each. Audi also makes a million, and it’s part of the VW Group, an order of magnitude larger again.
There seemed very little scope for synergy between Jaguar and Tata Motors. It’s one of the world’s largest truck and bus makers, and builds the Nano, the world’s cheapest car. But not much in between.
And yet, as Carl-Peter Forster, a former BMW director who’s now Tata Motors’ chief executive, says of JLR: “Since I came here I’ve learned that the most overrated virtue in the motor industry is synergy.” He says that JLR can work in canny ways with suppliers to access mundane yet important technologies such as transmissions for hybrid cars. Meanwhile, its engineers can develop unique selling points, such as its industry-leading lightweight aluminium body structures.
JLR’s success appears to hinge on the support of Ratan Tata, chairman of the Tata Group. He shows a close and, insiders say, positive interest in model development. And – thanks to his $70billion conglomerate that ranges through cars to steel to IT and consulting – he has pockets deep enough to pay.
“The Jaguar and Land Rover brands are undervalued”, says Forster. “So JLR is investing £1.5billion per year over the next five years in developing and tooling up for new products. As a percentage of turnover, this figure is higher than the industry norm.” Actually, it’s probably higher than regular stockmarket shareholders would stand for. Just as well JLR’s shareholder takes a long view.
In the Ford days, investment was always done on the basis of whether it would in itself bring a return.
“You can’t develop a premium brand purely from a business case,” Forster says. “It’s difficult to create emotional pull in a brand, but Jaguar and Land Rover already have it. That’s why it’s worth investing.”
JLR’s main competitors, BMW and Mercedes, make more than a million cars a year each. Audi also makes a million, and it’s part of the VW Group, an order of magnitude larger again.
There seemed very little scope for synergy between Jaguar and Tata Motors. It’s one of the world’s largest truck and bus makers, and builds the Nano, the world’s cheapest car. But not much in between.
And yet, as Carl-Peter Forster, a former BMW director who’s now Tata Motors’ chief executive, says of JLR: “Since I came here I’ve learned that the most overrated virtue in the motor industry is synergy.” He says that JLR can work in canny ways with suppliers to access mundane yet important technologies such as transmissions for hybrid cars. Meanwhile, its engineers can develop unique selling points, such as its industry-leading lightweight aluminium body structures.
JLR’s success appears to hinge on the support of Ratan Tata, chairman of the Tata Group. He shows a close and, insiders say, positive interest in model development. And – thanks to his $70billion conglomerate that ranges through cars to steel to IT and consulting – he has pockets deep enough to pay.
“The Jaguar and Land Rover brands are undervalued”, says Forster. “So JLR is investing £1.5billion per year over the next five years in developing and tooling up for new products. As a percentage of turnover, this figure is higher than the industry norm.” Actually, it’s probably higher than regular stockmarket shareholders would stand for. Just as well JLR’s shareholder takes a long view.
In the Ford days, investment was always done on the basis of whether it would in itself bring a return.
“You can’t develop a premium brand purely from a business case,” Forster says. “It’s difficult to create emotional pull in a brand, but Jaguar and Land Rover already have it. That’s why it’s worth investing.”
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