Gary Pusey

T he E nthusiast

WE ALL know that JLR has laid the blame for its current problems on a combination of uncertainty caused by Brexit, the slump in diesel sales, and the collapse of its important market in China. On this last point, we’ve heard a raft of reasons for what’s been happening in China: the impact of the tit-for-tat trade tariffs and the wider tubthumping squabbles with the USA; an apparent fall in local consumer confidence as Chinese buyers supposedly fall out of love with luxury goods; and the Chinese government’s crackdown on peer-to-peer lending, which has meant that such loans are no longer freely available for people to buy their dream cars.

Industry commentators have suggested that JLR are not alone, with all the other major manufacturers also suffering significant drops in sales in China. But over the past few weeks a new explanation for JLR’S ‘Chinese Car Crash’ has started to do the rounds, and the finger is now pointing at something we had all assumed (or hoped!) had been engineered out of JLR’S manufacturing operations years ago.: poor quality.

Writing recently in Automotive News, Chinese journalist Yang Jian suggested that JLR’S fundamental problems are “persistent woes with reliability and dependability”. His analysis has concluded that in fact JLR’S competitors in the Chinese luxury car market, including Audi, Mercedes, BMW, Cadillac, Lexus and Volvo, all posted significant sales growth there last year.

So can JLR’S problems really be related to poor quality? In 2012 JLR announced that it had agreed a joint venture with Chinese carmaker Chery to build a factory near Shanghai. Production started some two years later, and by 2017 the plant was building five locally-assembled models, including the Evoque and the Discovery. Local production allowed the vehicles to be modified to suit local tastes and also, crucially, allowed buyers to avoid the 25 per cent tariff imposed on imported vehicles. It worked, and according to Yang Jian JLR’S sales in China surged, growing from around 92,000 vehicles in 2015 to nearly 150,000 in 2017.

But product quality has apparently been an issue from the outset. In 2017 alone, according to Yang Jian, JLR carried out 13 recalls in China affecting a wide range of components from engines and instrument panels to airbags and batteries, covering over 106,000 vehicles – more than 70 per cent of local sales that year. Yang Jian relates that since August last year, Jaguar and Land Rover owners have been regularly protesting outside JLR’S headquarters in Shanghai to bring attention to the wide range of quality problems they claim are affecting their vehicles.

Local dealers have been left with huge inventories of unsold vehicles and massive discounting has become the norm, which

further tarnishes the brand and what it supposedly stands for. Meanwhile the local factory, expanded early last year with a capacity to build 200,000 vehicles a year, is operating at nowhere near full capacity.

I wondered whether these problems in China might be described as the growing pains of a new joint venture and a new market, but examination of JD Power’s most recent surveys seems to indicate that the problems are not confined to China. In the latest JD Power UK Vehicle Dependability Study, Jaguar comes 17th and Land Rover 22nd, soundly beaten by the likes of Kia, Dacia, Peugeot and Vauxhall.

In the same study for the US market the results are even worse, with Jaguar in 22nd place and Land Rover a lowly 31st. In JD Power’s US Initial Quality Study, both Jaguar and Land Rover are bouncing along at the very bottom of the table. So the issues seem to be far more widespread than China. The leading category of reported faults appears to be unreliable in-vehicle technology, which perhaps is not much of a surprise to those of us that have been wary of the headlong rush to embrace ever-increasing levels of technology in cars over recent years.

As if on cue, JLR’S engineers discovered a problem with carbon dioxide emissions on ten of the company’s models, which were found to be creating more of the greenhouse gas than they had been certified to emit. JLR reported the matter to the UK’S Vehicle Certification Agency, and the result was a recall affecting 44,000 vehicles in the UK alone, including some 2.0-litre 2016 to 2018 Discovery and Discovery Sports models, some Range Rover Sports, and some 2.0-litre Evoque and Velar vehicles, all with petrol and diesel engines. The solution will apparently involve software updates and physical alterations and some Evoques will, bizarrely, require new tyres.

The company’s most recent quarterly financial results reveal another huge loss of £273m, the biggest yet in what is now a run of four consecutive quarterly losses. And on top of that there has been an asset write- down of over £3bn. These assets include everything from the book values of the company’s inventory to its intellectual property and its factories, and all have been downgraded to reflect what the company calls, with more than a whiff of understatement, a “muted demand scenario”. The good news is that sales in the US and the UK have been increasing of late.

Meanwhile, shares in parent company Tata Motors have fallen by around half in the last year, primarily because Tata Motors relies on JLR for around 80 per cent of its sales and almost all of its profits. JLR’S ‘perfect storm’ is now a full-blown hurricane.

“Local dealers have been left with huge inventories of unsold vehicles and discounting has become the norm”

Gary Pusey is co-author of Range Rover The First Fifty, trustee of The Dunsfold Collection and a lifelong Land Rover enthusiast. What this man doesn’t know, isn’t worth knowing!