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JLR losing steam in China

OUR BUREAU | Updated on January 24, 2018

China script: The production line at the Chery Jaguar Land Rover plant in China's Jiangsu province, where retail volumes have fallen   -  REUTERS

Building volumes this fiscal will be a challenge

It was a market which Jaguar Land Rover was really bullish on but the last quarter showing clearly shows that the China script is not quite working to plan.

During January to March 2015, retail volumes in the world’s largest automobile market fell by 20.4 per cent to 23,500 cars from 29,600 units in the same period last year. Of these, Land Rover accounted for the lion’s share of 19,600 units.

Numbers game

While China accounted for 19 per cent of JLR’s sales in the quarter, down from 24 per cent in 2014, the UK quickly climbed to the top slot with 23 per cent share, compared to 20 per cent last year.

China, however, continues to be JLR’s biggest market for the entire fiscal.

Sales in the UK for the quarter totalled 28,700 units followed by Europe (which was up 6.2 per cent) with 26,500 units. North America sales jumped 17 per cent in the quarter to 23,300 units while Asia-Pacific was up 14.4 per cent to 7,200 units. Other markets saw a slump of 21.5 per cent to 15,100 units.

All in all, JLR’s sales in the quarter totalled 1.24 lakh units which were nearly at par with levels registered in the same quarter last year.

Betting on China

The China picture was a lot more positive for the whole year as it accounted for a quarter of total JLR sales with 1.16 lakh units, up 12.5 per cent over FY ’14. This gives an idea of the momentum registered in the first three quarters followed by the crash in Q4 which has set the alarm bells ringing. If the fall continues through 2015-16, the company will need to really think out of the box to ensure that it stays on course.

Europe (excluding Russia) and the UK reported around 87,000 units each for the year which put their share to the JLR pie at 19 per cent. With sales of 78,400 units, North America was next in line with a market share of 17 per cent.

Asia-Pacific saw numbers increase by nearly 17 per cent to 26,600 units while other markets were down nine per cent to 66,600 units.

Consequently, JLR sales for 2014-15 were 4.62 lakh units, up 6.4 per cent from the previous year’s tally of 4.34 lakh units. It is now a million dollar question if this fiscal will continue to see growth especially in the backdrop of China sales falling so dramatically in Q4.

Crucial time

JLR is betting big on this market whose numbers, in turn, have been the best piece of news to Tata Motors’s own struggling car business back home in India.

A JLR setback in China could really take the wind out of its sails unless, of course, the domestic Tata business revives with a flourish. Markets like Russia and Brazil will also be challenges given their fragile state right now.

In its investor presentation, JLR says it will remain focused on delivering ‘more great products’ in FY ’16. It will continue to ramp up sales of the new Jaguar XE in May while preparing to launch the all-new XF. The 16MY Evoque, including a convertible variant, and the F-PACE will debut in early 2016.

Published on May 29, 2015

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