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JLR growth and product strategy 00

Jaguar Land Rover, growth and product strategy – part 1

By Andrew Marsh, 10.12.15
Posted in: In-depth | Manufacturer Profiles | Public

Not long ago whole automotive sector suffered badly with the effects of the global financial market decline with the effects in terms of delayed model replacements still being seen more than 6 years later. Many vehicle manufacturers did the unthinkable in order to survive – a few did not.

Jaguar Land Rover (JLR) suffered more than most. At the time it was owned by Ford Motor Company with its largest, most profitable products struggling for sales. Indeed in common with many other manufacturers the rate of sales was at or below break-even. Then it happened….

China.

Whilst the ‘mature’ vehicle markets of the world ran away from new vehicle sales, China developed an insatiable thirst for SUVs. Not just any old SUVs, but foreign upmarket SUVs. By happy co-incidence Ford were able to sell JLR shorn of most of its debt to Tata Motors, and so began a renaissance. Land Rover sales took off, and kept going. Range Rover, which Ford had spent much effort placing as an upmarket sub brand, also took off. Tata were in the right place at the right time – indeed in 2014 JLR contributed more than 85% of the Tata automotive division global profit.

So that’s all good. Well, not quite….

They key to sustained profitability is how a vehicle manufacturer uses key assemblies over and over again to minimise investment and ultimately reduce piece cost. Let’s look at three vehicle manufacturer’s approaches to this issue:

  • BMW. The engines (petrol and diesel) use a highly developed 500 cm3 combustion module which is then applied to all the engine configurations from in line 3 to V8. The body architecture is scalable, meaning the 1 to 4 series essentially share the same body structure beneath the skin, the ‘X3’ is a cross over, and all the larger vehicles share almost identical sub-structures. This matrix of engine choices and body styles maximises common components where ever possible, and took decades to develop.
  • Mercedes-Benz. The powertrain strategy is more fragmented than BMW but the body architecture from C class to S class shares the same architecture – minimising development lead time and maximising profit. By introducing structural certainty into the product life cycle the packaging of all the other systems is also more certain, and faster.
  • Volkswagen Group. Three assembly kits cover all vehicle segments from the smallest to the largest for the four volume brands – Audi, Seat, Skoda and Volkswagen. The largest kit – MQB – took a full 10 years to develop, including the engines, provision of LNG, provision of hybrid drive, provision of pure electric drive, and provision of hydrogen fuel technology.  Effectively all possible medium term option demands were co-developed so that as the market develops over the life cycle of the kit, Volkswagen Group simply switch on the appropriate elements. MQB once the roll out is completed later in 2015 will contribute more than 5 million vehicles per year.

The best part? Even though much has been written about all of the above, customers for these brands are not bothered because their choice of components wrapped up in the body style of their choice. Good profits, happy customers.

So how does JLR compare?

When Tata bought JLR they were given 5 years to access Ford components as part of a licence agreement. At the point of sale, that content looked like this:

  • Land Rover Defender (L316)– diesel engine and manual gearbox
  • Land Rover Freelander II(L359)  – diesel engine (co-developed with PSA), petrol engine, front body structure (shared with Mondeo CD345)
  • Land Rover Discovery III (L319) – diesel engine (co-developed with PSA), petrol engine (JLR design, built by Ford), T5 chassis, a few body stampings.
  • Range Rover Sport (L320) – diesel engine (V6 co-developed with PSA), petrol engine (JLR design, built by Ford), T5 chassis, a few body stampings.
  • Range Rover (L322) – diesel engine (V8 developed by Ford for JLR), petrol engine (JLR design, built by Ford). The body design was completed whilst Land Rover was part of the BMW Group.
  • Jaguar XF (X250) – re-mastered Lincoln Town Car platform (S type was first to use it), diesel engine (V6 co-developed with PSA), petrol engine (JLR design, built by Ford).
  • Jaguar XJ (350 and 351) – unique Jaguar aluminium intensive platform, diesel engine (V6 co-developed with PSA), petrol engine (JLR design, built by Ford).
  • Jaguar XK (X150) – another unique Jaguar aluminium intensive platform, diesel engine (V6 co-developed with PSA), petrol engine (JLR design, built by Ford).

Eight product lines, three of which used a separate chassis, two of which used nearly all aluminium construction, none of which used a powertrain built by JLR – in other words a fine collection of vehicles which were not being built profitably due to the lack of product strategy .

The XK (X150) had the overhangs shortened, reskinned and the optional four wheel drive system grafted from XJ X351 – the result? F-type, but no prospect of another iteration of this old architecture. © JLR Ltd

What did Tata do? They placed the vehicles in a way that JLR had never done before by using celeb photo opportunities. This technique is finely honed in India where celebs cross many boundary’s – from sport to film to TV to politics. Taking the essence of this and ensuring everything a vehicle customer touches or see’s is fashionable allowed Tata to re-freshen an essentially sound range of vehicles (albeit over complex with insufficient component sharing) at minimal cost and produce one outstanding product evolution- the Range Rover Evoque.

Freelander II used some Ford EUCD body structure – a theme continued with the Evoque (L38) and the Discovery Sport (L550). This represents a significant product cluster, although with a steel alloy load bearing structure. © JLR Ltd

The product line up looks like this now:

  • Land Rover Defender (L316) – diesel engine and manual gearbox. Due to cease production at the end of 2015 after 67 years. The original production line is odds on to be transferred to Tata, whilst an ‘all new’ Defender will be introduced in 2016.
  • Land Rover Discovery Sport (L550) – re-mastered Ford body architecture first seen on the Evoque, diesel engine (co-developed with PSA), petrol engine, front body structure (shared with Mondeo CD345). New four cylinder diesel and petrol engines built in house will replace the outsourced items.
  • Land Rover Discovery IV (L319) – same as the Disco III except the 3l V6 diesel engine (co-developed with PSA), petrol engine (JLR design, built by Ford), T5 chassis, a few body stampings. Due to end production soon.
  • Range Rover Evoque (L538) – re-mastered Ford body architecture, diesel engine (co-developed with PSA), petrol engine, front body structure (shared with Mondeo CD345). New four cylinder diesel and petrol engines built in house will replace the outsourced items.
  • Range Rover Sport (L494) – diesel engine (V6 co-developed with PSA) to be replaced shortly by the in-house diesel engine, petrol engine (JLR design, built by Ford), aluminium body structure shared with the Range Rover – evolved from but not shared with XJ.
  • Range Rover (L405) – diesel engine (V8 developed by Ford for JLR), petrol engine (JLR design, built by Ford), aluminium body structure shared with the Range Rover Sport L494 – evolved from but not shared with XJ.
  • Jaguar XE (X760) – new mostly aluminium body structure, in-house petrol and diesel 4 cylinder engines, V6 petrol engine (JLR design, built by Ford). Deliveries started in May 2015.
  • Jaguar XF (X260) – long wheel base version of the XE body structure, in-house petrol and diesel 4 cylinder engines, V6 petrol engine (JLR design, built by Ford). Deliveries started in August  2015.
  • Jaguar F-Pace (X761) – shares the base structure and mechanical layout with XE and XF, but is the very first Jaguar SUV. Deliveries are due to start in April 2016.
  • Jaguar XJ (350 and 351) – unique Jaguar aluminium intensive platform, diesel engine (V6 co-developed with PSA), petrol engines (JLR design, built by Ford).
  • Jaguar F-type – replaced the XK, uses the same base body structure (so not related to XJ, L405 or L494), petrol engines (JLR design, built by Ford).

New factories, new countries, analysis and conclusions……click here

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