JLR gets £68k for each car built as chip crisis changes priorities
JAGUAR LAND ROVER received an astonishing £68,000 for each car that it built and sold in the past three months of 2021 as Range Rover models dominated. The figure was up from an already impressive £61,000 from the previous quarter and reflects the extraordinary juggling that JLR has overseen to go about its normal business in the face of the global chip shortage. “This is probably the richest per-unit data we’ve had for more than 11 years,” said JLR chief financial officer Adrian Mardell. The extreme focus on higher-end models didn’t quite push JLR into the black, but the £9 million loss was far better than the massive £302m loss the company posted the previous quarter. The Range Rover and its Sport, Velar and Evoque range-mates accounted for 56% of wholesales for the three months, compared with 11% for Discovery-badged models and 14% for Jaguar models. Even the Defender had to take a back seat, at 17%, compared with 26% in the previous quarter. The reason for the bumper quarter in terms of revenue per model was twofold, Mardell told investors. First was the need to prioritise cars for the scarce chips and ignore cheaper models. “We’re consciously not allowing customers to order lowest-value derivatives, because they’re the last vehicles to be built and we don’t want customers to wait 12 months or more,” Mardell explained. “Building the cars that sell quickest and most valuably has worked very well.” Secondly, JLR was switching production from the Mk4 Range Rover to the highly anticipated new one. Mardell said there was a “huge bias” in production for the outgoing Range Rover to make sure that all customer orders were fulfilled. “That really has lifted the average revenue,” he said. The new Range Rover has yet to filter through in results, although JLR said that it has 31,000 orders for the model within its overall backlog of 155,000. The Defender backlog currently stands at 37,000, up from 33,000 in the previous quarter. Given that JLR has booked losses on sales of far more than that in the past, it proves that the company’s Refocus cost-saving strategy is working; and that if you’re forced to make fewer cars, selling the most profitable ones isn’t a bad strategy. It’s a lesson that nearly all car makers, not just JLR, learned in what was an extraordinary year.