The future of the famous British sports car manufacturer and SUV, Jaguar, is at stake while its Indian owners, Tata Motors, come together to decide how society affected by the coronavirus can revive.

Aunt Motors must decide what he wants to do with his affiliate Jaguar Land Rover (JLR) who lost 422 million pounds (466 million euros) before tax for the year ended March 31 after losing 3.6 billion pounds (4 billion euros) in fiscal 2019. JLR has therefore been in financial difficulty for some time, and the fallout from the coronavirus crisis will have highlighted the need to make vital decisions.

Aunt Motors said in mid-June that the decision would be made in a few weeks, which suggests that the news will be known before August.

Industry experts believe the Land Rover branch of Jaguar Land Rover ((JLR) would need some rationalization in his struggle to get out of a situation where he has to do without diesel, but the power of his brand allowed him to achieve great success in the face of world class opposition from the German BMWs, Mercedes and Audi, and Japanese Lexus.

Diesel, with its superior fuel economy and smooth power, seemed to be the ideal solution for large SUV and sports sedans. But it was only until " dieselgate "Is the discovery of Volkswagen hiding pollution levels in 2015, and diesel has lost its popularity. Until 2018, more than 90% of Land Rover's production was still powered by diesel.

Jaguar and Land Rover use too many "platforms" and these must be drastically reduced in order to lower costs and shorten development times. "Platforms" are the basic engineering required to make a vehicle. In the past, each car would have had its own components, mini city ​​car with family station wagon. Today, even the largest manufacturers use two or sometimes three basic "platforms" which can be, for example, a city car, a small SUV and a sports car. Companies like VW also use these platforms for several brands.

But Jaguar faces an existential threat.

Jaguar sports sedans, XE and XF, as well as the big limousine, the XJ, have not stood out in a world where SUV are kings. The small XE, launched to fight the BMW 3 series, has progressed for about a year, before slowing down about a third of the way to reach its goal of 100,000 annual sales.

Fortunately, SUV long promised and delayed adoption came with the F-Pace in 2015 and the E-Pace two years later. But even these big sellers came with the suspicion that they could be at the expense of the Land Rover. The I-Pace, fully electric, received favorable publicity but did not generate actual sales.

What is Jaguar?

And Jaguar seems to have lost track of its market position, what it can do best and where it can find sales with high profit margins. While Tata Motors is implementing its cost reduction program, some of its sedans such as the XE and the XF might just be in fashion. The big limousine XJ is about to become fully electric, while a huge SUV J-Pace promised, expected by 2021, would do the job perfectly in the US market, still the largest for Jaguar. The J-Pace is expected to take sales of the Porsche Cayenne, although it may also jeopardize some Range Rover prospects.

It is also suggested that Jaguar could become an all-electric brand, while rumors persist that it or all of JLR could be sold to the PSA Group or to an ambitious Chinese company. The recent agreement of JLR for the manufacture of battery components with BMW suggests a future alliance. The CEO of JLR, Ralf Speth, who will soon retire, said the company may be self-sufficient, but must consolidate its alliances. This is the only way to make sure that JLR can compete with the much larger German and Japanese competitors in terms of costs.

Professor Ferdinand Dudenhoeffer, director of the German Automobile Research Center ((BECAUSE), believes that Tata management Motors is attached to Jaguar, but that the first actions must be painful.

"Now you have to cut capacity and fire workers when demand calms down, but that is not the solution. My feeling is that if a broad alliance with BMW or any other manufacturer interested in manufacturing high-end cars could be concluded, it would make sense, "said Dudenhoeffer.

Dudenhoeffer said reports from the PSA Group, which includes Peugeot, Citroën, Opel and Vauxhall and soon Fiat Chrysler Automobiles ((FCA) also wouldn't be the right choice for Jaguar or Land Rover. "Jaguar needs innovation, not cost reduction. Carlos Tavares would put Jaguars on platforms Opel and it wouldn't end well, like with Ford a few years ago, "said Dudenhoeffer.

Ford Motor bought Jaguar in 1999 and Land Rover in 2000 before selling them to Tata Motors in 2008.

Jaguar goes to survive

Dudenhoeffer all things considered, Jaguar will survive.

“It depends on the possibility of cooperating and reducing development costs. If there is success in this area, yes, there is a good chance of survival. It would be great to reach an agreement with BMW, but I have a feeling that it will not be easy. After September, Speth will no longer be CEO and he understands BMW ((Speth was hired by BMW). If an inexperienced man runs the business, it will be a little trickier, "said Dudenhoeffer.

David Bailey, professor of business economics at the University of Birmingham, said that Jaguar must create a market for itself as a sports and electric alternative, even with its SUV.

" I think that JLR has tried to do too much, using 4 or 5 different platforms while a manufacturer like Volvo uses only 2 and does not try to compete on all fronts, but only on niches . Jaguar needs to move into the high-end luxury electric vehicle market, as is already the case with the XJ ", said Bailey.

Bailey said that since Europe is recovering more slowly from coronavirus than China, it is inevitable that Chinese companies will seek to make acquisitions, and Jaguar may be on their radar. The PSA group may also be interested. But he still thinks that Jaguar can do well.

“The Jaguar brand represents a lot in the United States, their largest market, and it has global appeal. Jaguar has been too slow to engage in new technologies and new markets. It was too slow in diesel, too slow in SUV and will it now be slow in the field of electric vehicles? But she tried to do everything for all men, but she couldn't compete with companies like BMW. It really needs to focus on niche markets, "said Bailey.

John Wormald, analyst at the British automotive consultancy firm Autopolis, agrees.

Go further into the market

“I think Tata will maintain Jaguar with a reduced product range and a significant reduction in investments. The solution, if there is one that works, must surely be to go deeper into the niche market. They cannot oppose Audi, BMW or Mercedes for reasons of product / production scale, but also of dealer networks and market access. They have a strong brand and image, and it’s still very much about racing, ”said Wormald.

Should the Jaguar become fully electric?

“The question of propulsion is very difficult. I have doubts about electric cars. It’s a shame about the diesel problem, it was the perfect solution for large high-end rear-wheel-drive sedans and their immediate derivatives. Return to engines (petrol) ? Bet that everything is not electric, even if heavier taxes are imposed on liquid fuels? " at declared Wormald.

Bailey, of the University of Birmingham, said that if Jaguar decides to enter the luxury electric vehicle market, it must act quickly before being overwhelmed, otherwise it will no longer be a niche company.

Jaguar will she be there in 5 years?

Distinctive and sporty

"I hope it will be. I think it's a brand that has a lot of resonance around the world. JLR must build Jaguars on common platforms with distinctive and sporty vehicles using the same underlying technology as Land Rover, "said Bailey.

Dudenhoeffer sees many possibilities for Jaguar and Land Rover, including alliances and takeovers that offer long-term chances of success, except one. "The worst case, from my point of view, is if she goes to ((Group) PSA, "said Dudenhoeffer.

Translated article from Forbes US – Author: Neil Winton

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