Quality control a factor in Jaguar Land Rover's China struggles
The British company has been struggling lately.
06 March 2019 at 08:40
JaguarLand Rover's current owners Tata are struggling with the company right now, with huge losses dominating the headlines.
For a time it looked as if the Indian company had succeeded where previous owner Ford had failed – under its ownership, Jaguar and Land Rover (which back then were separate businesses) struggled to turn a profit – and while on the face of it the now aligned Jaguar Land Rover appeared to be doing well, recent events have confirmed that the reality is quite the opposite.
With China sales slumping, and diesel demand in Europe also decreasing rapidly, so began the downfall of Jaguar Land Rover, which had been making money before then.
"JLR faces all these challenges and more, as it is the smallest of the mainstream luxury carmakers, barring Volvo," Deepesh Rathore, a London-based director at Emerging Markets Automotive Advisors is quoted by Automotive News Europe.
Jaguar Land Rover itself lost £3.4 billion last year, with sales in China, the world's biggest car market, dropping by 35 percent in just nine months – the Chinese market as a whole dropped by four percent. What's more, with Jaguar Land Rover's key rivals – namely the premium German brands – looking to start production in China, it could fall even further behind.
The drop in Chinese sales has been somewhat attributed to quality control – J.D. Power survey in the US in June 2018 revealed that both Jaguar and Land Rover were the bottom two brands of the of 31 brands in the survey. Quality issues have led to a number of recalls in China.
"This has greatly jeopardized Chinese consumers' confidence in the brand value," said John Zeng, managing director of LMC Automotive Shanghai, according to Automotive News Europe. "[Jaguar Land Rover's] quality control capability and its after-sales network are not good enough to support its volume expansion or help it compete with rivals."
As a result of its British business' struggles, Tata shares fell by 60 percent last year. Jaguar Land Rover is now reportedly looking to raise nearly £800 million in the next 14 months just to compensate for its tricky last year.