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Land Rover Has An Incredibly Wonderful Problem

13K views 51 replies 20 participants last post by  Col Klink 
#1 ·
Automotive News

November 1, 2014

You don't read articles like this everyday:

(Article Quotes):

Jaguar Land Rover dealers are struggling because of acute shortages of key products, said Joe Eberhardt, the company's CEO for North America. Staff Reporter Diana T. Kurylko interviewed Eberhardt, 51, last month.


What's your biggest accomplishment since joining JLR, and what are your goals going forward?


The biggest accomplishment is to continue the positive development of the business in North America. There is nothing that needed to be fundamentally changed. In many situations where you come in, you need a turnaround or to start this fresh or new. We are not moving or changing brands or trying to reinvent the retail model.

A lot of positive initiatives have been launched. It is not a big accomplishment, but that is not disappointing to me. Providing the support and focus to the initiatives and managing this situation with dealers -- that is challenging. We're providing the comfort that there is relief in sight with the availability of Land Rovers and a bright future for the Jaguar brand.

How much inventory is there?

Days supply at the end of September is on average 40, down from 75 earlier in the year. We have 35 days of XF and 27 on the XJ. Land Rover is 18 days total, Range Rover Sport is 11 and Range Rover is 12 -- which is unheard of. We have a six-month sold order bank for the Range Rover, four months for the Range Rover Sport and three months for the LR4.

We have opened up the pipeline, not just the next 60 days but further out. We are opening up the allocation and product system that far out so that dealers can know when their vehicles are coming.

It's a problem, but a good problem to have. You can either have too many cars or not enough. It has just been extreme.

How are Jaguar dealers coping?

It is very challenging. We have low inventory and a fairly complex model lineup for Jaguar, and it is very difficult to fill customer needs. We need to manage dealers through that process. They aren't very happy about it, and it's understandable.
 
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#2 ·
Cadillac would do well to follow and possibly emulate the sucess of the Jaguar Land Rover Group. They seem to be executing perfectly on-par.

Must be a few people at Ford kicking themselves for letting this one go (although of course, they simply had no choice at the time - and were lucky to even find a buyer).

I am looking for a new vehicle. Was at a BMW dealer this morning and saw a transaction which my salesman reported as the sale of a BMW i8 for $27,500 over list. The buyer was thrilled.

I was jealous.
 
#3 · (Edited)
JLR have a lot of new stuff coming down the pike and so does Cadillac. Jaguar and Cadillac (LR to a lesser extent) are constrained by the amount of models they offer, but once they have expanded their product portfolio the situation should change.

For Cadillac getting the new XT5 to market will (basically their volume leader) help, and for Jaguar obviously the XE in early 2016 is for all intents and purposes essentially the Cavalry coming over the hill to save the day. As long as the Discovery Sport is not priced ridiculously high it's probably going to sell in greater numbers than the meh LR2.

Imo The LR Discovery Sport looks better than all of it's contemporaries. It looks Excellent in more muted conservative colors, but also looks fantastic in a wacky shade of orange.






 
#6 ·
Hopefully you are wrong! It needs to be priced competitively with decent (not crazy margins) profit margins. Short term, higher sales is more important than slightly higher profit margins.

Nothing says success more than seeing a particular model of car everywhere you look. It exposes the general public to it, who in a lot of instances are going to be intriqued and think "Hmmm, must be really good, I'm seeing those everywhere"

Now if the media are also singing it's praises that helps as well. With a bit of luck those admiring glances are going to translate to increased showroom traffic and of course sales.
 
#5 ·
http://seekingalpha.com/article/254...tember-sale-lower-sale-but-the-right-strategy

Total JLR units declined to 4,248 (-9.6% y/y) for the month driven by LR (-8.3%) and Jaguar (-13%). This compared with BMW (+8.6%), Mercedes (+10%), and Audi (+14%) which have been aggressive in offering incentive to prospective buyers.

On the other hand, JLR's incentive declined -38% y/y with LR incentive down the most (-70% y/y) to $300, which is the lowest among the luxury brands. I note that incentives for Evoque, LR2 and LR4 all saw 60-75% decline in incentives while Range Rover and RR Sport saw zero incentives. Jaguar saw an average of 20-30% decline in incentives.


While the lower incentive may have negatively impacted the overall sales volume, LR inventory continues to remain low with approximately 17 days of sale at the end of September, flat vs. August but 5 days lower than a year ago. Jaguar ended the month with 40 days, s. 59 in August and 70 a year ago. Given the tight supply, management has been focusing on shifting the more popular models to the more profitable markets and avoiding the competitive environment in the US. While the US sale may be negatively impacted as we have seen in September, the JLR's overall profitably will likely improve because of this strategy, in my view. Moreover, while competitors have been maintaining their incentive level to attract sales, JLR's decision to maintain a rational pricing is accretive to the overall brand, which is a long-term positive.
JLR incentives are the lowest in the industry by a very high margin. Range Rover and Range Rover Sport have NO Incentives, in fact buyers pay Premium for faster delivery. Waiting list is 4-6 months. Inventory is Lowest in the Industry.

Also, Land Rover has the Youngest average age of buyer at 48 years among all Brands including Mass Market Brands:

While Land Rover's average customer was just under 48 years old last year — the youngest average age among car brands reviewed
http://www.usatoday.com/story/money/cars/2014/10/04/24-7-wall-st-cars-oldest-buyers/16587437/
 
#8 ·
Also, Land Rover has the Youngest average age of buyer at 48 years among all Brands including Mass Market Brands:

http://www.usatoday.com/story/money/cars/2014/10/04/24-7-wall-st-cars-oldest-buyers/16587437/
That's because older folks know better than to waste their money on the garbage that Land Rover builds...

I deal with a lot of wealthy (some ridiculously wealthy) auto collectors and enthusiasts. I've yet to meet one who has gone back and purchased a second Land Rover after their first experience. That is exactly why Cadillac has to take the Escalade further. In the lower models, there's plenty of competition, and the SRX, XT5 (or whatever it will be called next) and its proposed siblings may very well compete to attract future Discovery, LR2, & Evoque shoppers. But in the $85k, $100k+ realm, there's very little competition. Cadillac should invest in the "Escalade" brand. Take it to the extreme of modern luxury. They're leaving money on the table if they don't.
 
#12 ·
Cadillac is the wrong brand to counter Land Rover.

Cadillac should focus on brands it is already competing with Audi/BMW/Jaguar/Lexus/Lincoln/Mercedes Benz and Porsche.

Cadillac has never competed in the Off-Road market and it's styling does not lend it to them, Cadillac is better off developing a models to compete with vehicles like Macan/X3, Q3/Q5, X5/Cayenne and MB GL along with the upcoming Jag Crossovers.

GMC is a far better choice and can be offered in Europe using the existing Opel/Vauxhall dealer network for volume sales as well as Chinese Buick dealers. In the U.S. GMC is commonly offered alongside Cadillac anyway so GMC can focus on Off-Road Luxury and given past success will sell plenty at high margins while allowing Cadillac enough "Space" to counter it's competitor's CUV/Crossover/SUV models.

GMC's Denali line and other premium trims should be aimed at Land Rover starting with an all new CUV based off of the Mokka in order to have a RHD variant aimed at the Evoque, the next generation Terrain vs. new Discovery Sport an all new Envoy and Envoy XL to counter the Range Rover Sport and Range Rover.

GMC can add other new vehicles like the Jimmy and Safari aimed at "traditional" Land Rover models like the original Discovery where the GMC vehicles are based on a BOF platform with extreme off-road condition capabilities.

GMC can also revive the Holden Adventra as a large "Unibody" model if needed or use the Acadia.

GMC also has the existing Yukon and Yukon XL that need a new WB model between them with updated on and off-road capabilities including a "H2" variant.
 
#14 ·
Who was suggesting that Cadillac should go after Land Rover? I think some of us were commenting on the 'growing pains' parallels between JLR (especially Jaguar and Cadillac) and Cadillac as they expand their offerings.

Both Marques are trying to fill holes in their product portfolio (Land Rover is further along in that regard) and once all the pieces are in place sales should rise accordingly. I'm of the opinion that unless the luxury end of the car market keeps expanding a lot of those increased sales will undoubtedly come at the expense of the competition.

Cadillac needs a smaller CUV/SUV below the XT5 to go head to head with the BMW X1 and X3. It needs to be bigger than the Buick Encore which is a little too diminutive to base a Cadillac on. I'd love to see the breakdown of the X1 and X3 sales, as it seems to me that BMW could have one vehicle rather than two, covering this end of the market. At least the Mercedes GLA and GLK are fundamentally different vehicles.
 
#21 ·
If J/LR convince Tata to build that 300k/yr plant in North America, they have rocks in their head.
The reson J/LR is making good profit at the moment is due to limited supply of desired vehicles,
build an abundance of stock and watch profits tumble as exclusivity disappears.

That was the conundrum Ford faced, the more it tried to increase jag's volume, the more quality suffered.
I'm sure more volume would help J/LR, they just need to be careful about getting ahead of themselves.
 
#24 · (Edited)
Long term JLR will need another factory but right now I think they have about 600,000+ capacity with factories in China, Brazil, India and the UK. No doubt the long term goal is to get JLR to 1,000,000 vehicles a year (perhaps 10 years or so) so clearly they will need to add a factory somewhere. The rumored USA factory was 200K so clearly that wouldn't be enough capacity to reach a million.

Two months ago I saw the new Defender at a market research event. Two of them were on hand in the metal (or fiberglass) and one was in a series of large renderings. Three different versions, and at a guess I'd say they are hoping to sell 70,000-100,000 of these a year. They have to find somewhere to crank those out, so perhaps the USA will be that place?
 
#23 ·
They build a nice looking vehicle! Build them and they shall come!

However, the key is to also build the right amount. Cadillac/GM tends to produce more than demand, requiring them to put a lot of money on the hood to move the product. And of course this also leaves them with the headlines "135 day supply of ATS's on the lot". If GM simply produced less they could still sell the same ~2,000 a month and only have a 40 day supply on the lot - all of a sudden it sounds like a success to the press!
 
#36 ·
Well be prepared to see pretty good sales in the U.S. once it goes on sale regardless whether you think it looks like it predates the XF's design. Incidentally the 3-series looking like the 5 series (and vice versa) hasn't hindered either of those cars, and remind me again exactly what is the stylistic difference between the new A3 versus the A4 apart from a slightly smaller package?

BTW within a year the new XF will be revealed, so there is a chance the designs will diverge a little. Either way the XE and XF having a familial look about them is a big NON issue, and the latest XF looks great so the XE looking similar is a plus imo. The similarity only matters to those looking to nitpick.

The XE goes on sale in mid 2016 outside of the U.S. so we'll know long before it goes on sale in the U.S. whether it's design resonates with buyers. My money is on it being a huge hit in the same way the Evoque was. Also they'll likely have them for the press to drive early next year, and if it can match the early JLR hyperbole about it's abilities, then all I can say is: "Katie bar the door!"
 
#42 ·
Here's a thought. What if the next CTS moves to Omega (after all it's lighter than the CTS Alpha) and the ATS moves up a little in size, not a lot though and still below CTS size. Then the sub ATS can basically adopt the 109.3 Wheelbase platform.
 
#43 · (Edited)
Back to JLR. A video of the Discovery Sport from LR's site. Boy this vehicle has all kinds of win written all over it. If this isn't another Evoque sized it I'll be shocked.




BTW. The video really is excellent. Beautiful cinematography, and the scenery (Iceland) ain't too shabby either.
 
#50 ·
I'm glad there are plenty of rich folks out there that part with their money. Keeps the economy moving. Too bad they don't have much sense typically.
 
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