Blaming all manner of things on Brexit is the easy option, but even a fleeting glance behind the curtain highlights more tangible factors contributing to the job cuts announced by Jaguar Land Rover (JLR) and Ford at the start of this week.
Managerial and administration jobs are the focus of JLR’s HR streamlining, with roughly 10% of their 43,000 set to depart. Saving £2.5bn fairly quickly and ensuring profitable growth sustainable in the long-term are the British marque’s main aims, on the back of an overall 4.6% sales drop across the Jaguar and Land Rover brands during 2018. This may have taken some by surprise, JLR seemingly a business that couldn’t put a foot wrong – but there are clear reasons behind the current difficulties, even if Brexit is pushed to one side.
Simultaneously, Ford announced the shedding of jobs across the UK and Europe, with its Bridgend plant tipped to see over 1,000 staff go because engine production over coming years will require fewer hands. Ironically, Ford supplies engines to JLR, and the blue oval’s new 1.5-litre, three-cylinder ‘Dragon’ engine can be produced more efficiently.
As a car leasing firm based in the UK, the first factor palpably apparent to Vehicle Consulting is that Jaguar’s XE and XF saloons have never caught up neck and neck with equivalents from Audi, BMW and Mercedes.
Further afield, JLR has proven a runaway success in China in recent years, but thanks to Trump’s trade war and other economic factors, sales there slumped an enormous 46% last year. Ouch, indeed.
Some voices also speak of Jaguar Land Rover as a victim of its own success, having produced far too many cars and now struggling to find customers for them. It’s fair to say that an Evoque can be spotted on the road every couple of minutes in many parts of the UK and appetite for them in the contract hire world has always remained immense. While leasing is much more strictly regulated these days, the over-generous car finance and credit atmosphere in the UK and over the pond has certainly fuelled the ubiquity of JLR’s now somewhat mainstream models, but it’s increasingly mooted that too many cars have still been pumped out from the Midlands, causing the ‘on paper’ drop in sales. This theory doesn’t tally with the long factory lead times sometimes stipulated, though, causing some puzzled frowns. If supply is indeed outstripping demand that itself remains high, it’s unclear where the vehicles are disappearing to.
With diesel firmly in the doghouse despite the latest Euro 6 engines performing far more cleanly and emitting far less CO2 and NOx than older engines, it’s barely conceivable that the UK government will do legislative donuts and suddenly endorse diesel again. Nine out of ten JLR vehicles reportedly still drink from the black nozzle, which speaks volumes.
Although it has its own flaws, electric is undeniably the way to go, and while the Evoque is relatively more affordable and has hence racked up stacks of sales and lease contracts, the all-electric I-PACE can never be expected to reach dizzy heights, because of its price-point. For a company once perceived as astutely in tune, it would be forgivable to think of JLR as having dropped the ball by failing to introduce plug-in hybrid (PHEV) powertrains to its saloons, while the introduction of an all-electric Evoque alongside the I-PACE would surely have guaranteed continued stratospheric success. Investment in electric powertrains and batteries has indeed just been announced, with the Midlands set to remain at the core of this vitally important part of JLR’s future – but it’s still fair to think of such news as too little, too late. Twelve to eighteen months is too long to wait for electrified Jaguars and Land Rovers, away from the expensive and ironic PHEV Range Rovers currently on sale.
Brexit will undeniably have some kind of impact on British and indeed all car manufacturers who aren’t relishing the prospect of tariffs being places on imported and exported automotive components and vehicles, not to mention the shockwave effect across supply chains – but it can’t be used as the main excuse.
Ford, meanwhile, has seemingly become a victim of presenting far too many models across its range, at a time when SUVs continue to be gobbled up and formerly popular cars like the Mondeo are fast fizzling out. Ford plants are shutting, the ambiguous C-Max is set to be canned, and it’s likely that the company will focus on only its popular models, with crossover SUVs and electrification very much the chief focusses. However, German manufacturers seem as keen as ever to fill every imaginable niche that nobody thought of anyway, with the Audi A9, Q4 and Q8, BMW X7 and Volkswagen T-Cross as prime examples.
Ford and Volkswagen are two of the most iconic names in the car world and news of their various freshly-announced partnerships may have bowled some people over, but at a time in history when tech firms like Apple, Tesla and Uber along with household names like Dyson are speeding ahead in the electric car race, it makes some sense for mighty names like this pair to form joint ventures.
Cleaner vans and pickup trucks that are ever more sympathetic to the environment will be one focus, while Ford and VW will also pool certain resources and efforts into electric and autonomous or ‘driverless’ cars. Both titans’ bosses have extolled collaboration as a key strategy for survival amidst fast-changing influences affecting the car industry. True, it’s not the first time they or indeed other rivals have worked together, the Galaxy and Sharan project a notable example, and even BMW and Mercedes are expected to start developing parts, platforms and technology together, hot on the heels of their mobility divisions just having fused in a move that was yet again described as one with staving off Silicone Valley its prime motivation.
In many ways, the automotive world is changing beyond recognition, and Vehicle Consulting will continue keeping our car leasing clients briefed on the latest industry developments while presenting the latest contract hire deals and in-stock offers.