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Jaguar Land Rover: the birth of new ideas
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CHINA is already the biggest market for Jaguar Land Rover, where the combined sales of its two brands exceeded 100,000 units in the company’s 2013-14 fiscal year. But the British premium carmaker aims to take that achievement to a whole new level with its Chinese partner Chery by building Jaguar Land Rover’s first overseas manufacturing plant, with annual capacity of 130,000 units.
Ralf Speth, CEO of Jaguar Land Rover, said the creation of its first joint venture is like having a first child. The first priority is to make sure it is healthy. The new plant in Changshu, Jiangsu Province, is scheduled to start operations in the fourth quarter.
Using robots, the plant has started making some prototypes, with 85 percent of its body shop automated — the highest rate among all Jaguar Land Rover factories.
To uphold manufacturing standards, the company has sent the first group of employees at the plant to its facilities in the UK for training.
It has set an initial localization rate for Changshu at only around 40 percent.
“We want to grow organically,” Speth stressed, explaining that the company will move up the localization ladder one step at a time as it gets quality suppliers.
The first product to roll off the line will be a Land Rover model. Earlier this month, Chery Jaguar Land Rover officially announced the establishment of an integrated marketing, sales and service organisation, with Jaguar Land Rover China responsible for imported products.
That means the imported and locally produced Jaguar Land Rover cars will be sold through the same franchise network, but dealerships will need to sign separate contracts with Jaguar Land Rover China and Chery Jaguar Land Rover.
Auto analyst Zhong Shi said the structure of the integrated organization as a non-legal entity shows Jaguar Land Rover’s determination to unify its sales network and at the same time satisfy all interested parties.
“How to divide profits is a tricky question for the Chinese and foreign sides because imported cars will probably remain the biggest money-spinners for the British premium carmaker in the future,” Zhong said.
The establishment of the organization is important because it provides breathing space for negotiation. The transitional period for the development of Jaguar Land Rover’s sales network in China may last two or three years before the carmaker explores the possibility of forming a national sales company.
Jaguar Land Rover cannot be too careful about avoiding cannibalism between its imported and locally produced cars, as other carmakers have learned, Zhong said.
It is still unclear which Jaguar Land Rover models will be produced in China, but the likely options include the Land Rover Range Rover Evoque and Jaguar XF that are already available in China as imports.
The market reception of its products is probably the least concern for Jaguar Land Rover at present.
Jaguar is now positioned as a challenger brand that resonates well with aspirational shoppers, while Land Rover is popular in the SUV segment even though dealers often charge more because demand far exceeds supply.
Andy Goss, director of group sales operations at Jaguar Land Rover, said the company doesn’t plan to take on Mercedes-Benz, BMW or Audi in sales volume. And honestly, it doesn’t need to. “The three German brands — our principal competition — are very close to each other from the design perspective,” he said. “But when you look at what we do, you can detect a big difference in the sense, the style, the touch and the smell.”
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