JLR boss Thierry is no fool

YOU may have read that in March Volkswagen Group of America issued a press release announcing that it was ‘unveiling the official change of its US brand name from Volkswagen of America to Voltswagen of America’ to reflect its commitment to an all-electric future. The decision caused consternation among the company’s US investors and the media, and questions were asked. The cannier commentators were already wondering whether this was an April Fool’s Day joke intended to draw attention to the upcoming launch of the company’s all-electric SUV, the ID.4. The trouble was that the story was not dated April 1, 2021, which, as we all know, is generally considered to be the day to play your April Fool.

In response to requests for clarification, astonishingly VW issued another statement confirming the name change, and the company’s share price leapt from $33.13 to a peak of $38.46 two days later. Media around the world had picked up on the story, and suddenly it was unstoppable. Financial and market analysts commented publicly on the change, some even lending their enthusiastic support to it. Eventually VW confessed that it was indeed an April Fool joke, but by then the damage was done.

Journalists and financial analysts, some with egg on their faces, were left seething. There have been loud voices demanding that market regulators should investigate the company for deliberately issuing misinformation that might have manipulated its stock price. Others have said that VW, still reeling from its self-inflicted ‘dieselgate’ scandal, should have known better. The company could certainly have done without another problem of its own creation to deal with. As commentator Hugo Griffiths wrote in Auto Express: ‘‘Timing is crucial when telling a joke; this one was mistimed by several days’’.

Which is why when I read recently that JLR’S CEO Thierry Bolloré had apparently stated that the reputation his company’s vehicles have for poor quality was costing it an astonishing 100,000 lost new vehicle sales every year, I had to check that it wasn’t April the first! Because for a car company boss to acknowledge that his products have quality issues, and then to say these are causing it to lose what amounts toé around a quarter of its annual sales, based on 2020 sales numbers, was either a remarkably brave thing to do, or plain dumb. Or an April Fool.

The story appears to have been reported initially by Automotive News, and it seems that Mr Bolloré was addressing an investors' conference call when he made the astonishing comments. It reminded me of a speech made by Gerald Ratner at London’s Institute of Directors in 1991. Some of you might remember it. Ratner, who had taken over his family’s high street jewellery business and grown it from 150 to over 2000 stores in six years, was at the event to talk about how his business had grown so fast, and why it had become so successful. In what he subsequently insisted he had meant to be a joke, he said in his speech that some of the products sold in his stores were ‘‘total crap’’, while some of the earrings were ‘‘cheaper than an M&S prawn sandwich but probably wouldn’t last as long’’.

When the story broke the following day, the effect was immediate. Tens of thousands of customers deserted the company’s shops and the value of the business was decimated. Ratner had to resign. The brand was so tainted that the company changed its name, and ‘doing a Ratner’ entered the English language as shorthand for screwing-up in spectacular, self-inflicted fashion.

But Thierry Bolloré’s comments were no April Fool’s Day joke, so had he done a Ratner? I don’t think he has, for two very important reasons. Firstly, we all know that product quality has been a long-standing issue for JLR that goes way back in time, even as far as the British Leyland days. JLR’S management have recognised this and have made serious improvements over the past few years, but even in 2020 it remained a problem, with warranty costs apparently totalling almost £0.5bn for just nine months of the year. In 2019, when JLR’S sales collapsed in the important Chinese market, local commentators there suggested that one of the main reasons for this was poor product quality. And, of course, the vehicle and customer satisfaction surveys by the likes of JD Power, What Car and Which? regularly shine a no doubt unwelcome spotlight on JLR’S ongoing tussle with quality.

However, it isn’t just about improving the company’s position in these various league tables, it is also to do with overturning entrenched opinions and perceptions in the minds of potential customers, and this is much more difficult to achieve. And that brings us to the second reason why Mr Bolloré is right to acknowledge the issue and commit to fixing it, because he has said that JLR will be a maker of high-end luxury vehicles. Poor quality, real or perceived, does not sit well with that objective.

And unlike Ratner’s shares, Tata’s have not fallen off a cliff following Bollore’s comments. In fact, Tata’s shares have doubled in value since the Frenchman took the helm at JLR last September. I’m not suggesting this is all his doing, because JLR is just one of Tata’s many business interests. But JLR is a very important and high-profile component in the Tata behemoth, and a bit of a bell-weather.

“When I read that JLR'S CEO had stated that the reputation for poor quality was costing it 100,000 lost new vehicle sales every year, I had to check that it wasn't April the first!"

Award-winning journalist 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!