In the second part of our examination of JLR, we look at Land-Rover’s market stratification, Ford’s powertrain legacy and their less than stellar reliability record.
Land Rover’s confused offering
JLR’s strategy with Land Rover is to stratify the brand into three distinct levels. Land Rover at entry level, Discovery as median level and Range Rover as upper level. However, at the time of writing, this distinction remains insufficiently clear. The newly announced 2015 Discovery Sport is a good example of this – appearing a little too akin to its Range Rover derivative, and suggesting there is work to be done to put some discernible distance between the individual marques. Until a new generation Defender is available, this strategy will continue to confuse customers, with the added problem that JLR have nothing to offer buyers trading from the outgoing Freelander model – unless they are prepared to dig considerably deeper into their pockets.
Image can be bought, class is earned and while the Range Rover brand retains its allure for now, it is easily lost – as a brand like Burberry can recently attest. Land Rover’s products increasingly risk becoming associated with the worst kind of new money. This may not be a pressing concern for Ralph Speth and his minions while sales are growing across the globe, but luxury brands can only command premium prices if they are perceived as being intrinsically desirable. Balancing this may prove to be the trickiest challenge they face.
Furthermore, JLR’s eggs remain almost totally in the Land/Range Rover basket at present, meaning any sudden contraction of the SUV market could have seriously damaging consequences upon JLR’s profitability. Suggestions therefore that LR may diversify into more conventional vehicles would make sense in the mid-term, and would certainly give them a buffer against sudden market shifts.
The Ford factor
JLR’s recent past continues to cast a sizeable blue oval-shaped shadow. This is largely due to the fact that currently, all of JLR’s engines are built at either Ford’s Dagenham or Brigend plants; many of which are Ford or joint PSA designs. From 2015 however, this will begin to diminish with the introduction of JLR’s in-house engine family. Nevertheless, Ford will continue to produce JLR’s larger multi-cylinder engines, meaning their dependence looks set to continue for some time yet. How much longer Ford remains willing to continue this arrangement and how much life JLR can squeeze out of a series of ageing V6 and V8 powerplants remains the burning question however. Being at the mercy of another manufacturer is hardly an ideal situation and also raises serious questions around credibility. Just how premium can they assert themselves to be when their engines are built (and in some cases used) by mass-market Ford?
Then there’s the age factor. JLR’s petrol-driven AJV8 unit was first schemed in the late 1980’s, prior to Ford’s 1989 takeover of Jaguar. Funded and co-developed by Uncle Henry during the early 1990’s, this unit was commendably powerful, lightweight and refined when launched in 1996. By current industry standards however, it’s massively heavy, close to its developmental limit and while proven and capable, will become increasingly outclassed by newer, better performing units from rivals. The entire industry is downsizing, but there remains strong demand for large capacity multi cylinder engines; one which looks set to continue for some time yet, so unless their new generation of engines can encompass larger capacity variants, JLR’s more prestigious models risk falling behind.
Jaguar appears to have largely shed its reputation for unreliability and poor assembly. In the case of Land Rover, this is not quite the case yet. Reliable reports suggest that the level of electrical gremlins afflicting even the newest Range Rover models remains at an unacceptable level. As their cars become ever more tech-rich, ensuring it all works is not only necessary, but essential – especially given the prices JLR are charging. A more pressing risk lies with the all-new and unproven range of engines, which are set to form the cornerstone of JLR’s future. These engines will need to be reliable out of the box as well as offering class leading performance and efficiency. Failure here could spell disaster.
In the next part, we’ll look at some of the reasons for Jaguar’s less than stellar market performance in the US.