Specialist
Former Senior Director at Jaguar Land Rover
Questions
1.
Could you begin with your view on how the JLR story has evolved over the last few years?
2.
On page 16 of the Q3 2019 results, management show that today’s focus is on two things, rejuvenating sales and improving cash flows and profitability or project charge, yet the structural issues are not a focus. What do you think the core issues are for JLR and are these solvable?
3.
You mentioned a huge pressure on sales internally. What is your view of Tata’s ownership and governance of JLR and how do you think Tata would be looking at this situation?
4.
JLR claims to focus on dealer profitability over volumes to get back to sustainable growth in China. What are the issues at the dealership level for JLR compared to competitors?
5.
You mentioned how BMW and Audi went through this process years ago of backstopping profits or providing security to dealers. What did they do in terms of the cost?
6.
The company lists 220 dealers on page 22 with a rough breakdown in the tiers. What is the cost required to backstop their profits or provide more security?
7.
Does JLR need to invest CAPEX to give to the dealers or could it give them a better price? How does it work? What can we expect to happen?
8.
What distribution of sales would you expect those 18% of tier 1 dealers to generate for total Chinese volumes?
9.
What does a typical dealer look like in these tier 1 or tier 2 cities? Are they exclusively for JLR or do they sell Audis and BMWs as well?
10.
On pages 21-24 of the report, management mention alignment with dealers secured for JLR. Is it likely?
11.
Obviously there have been talks and discussions around quality issues in China. Do you have any insight here?
12.
What are the reasons for the quality issues? There is a variety of problems around leakage of the engine oil or even the EV [electric vehicle] cars being unchargeable. What are the core issues here?
13.
Do you think JLR’s portfolio is too wide and it needs to cut some models?
14.
There have been reports of increased discounts on the imported Range Rovers in China, which clearly is where most of JLR’s profit is made. Is there a correlation between discounting on different models of JLR that can link to where the profits are made on the imported Range Rovers?
15.
How does a parallel-imported Range Rover differ?
16.
What are your expectations for the new Land Rover Evoque in Europe and North America?
17.
Why do you think JLR is outperforming in America and the UK so much? From slide 7 of the presentation, it grew 21% in Q3 against a fairly flat market.
18.
What risks do you see for Range Rover, particularly in a hard Brexit environment? What can JLR do with Range Rover production to make sure it has a minimum volume out there to sell?
19.
Do you see the new Evoque achieving a better pricing premium to previous Range Rovers?
20.
What opportunities do you see for the new Defender?
21.
All the Jaguar models excluding the E and I-Pace are down YoY. Is this mainly down to the saloon or sedan-type model and quality issues or are there other players competing?
22.
You mentioned that the Jaguar portfolio is quite broad and has been underperforming and had quality issues for a while. Why is it now that there is a huge decrease in the performance of the business? Is it more that the market is turning at the top of the cycle or are there other players catching up with JLR?
23.
Does JLR have the electrical architecture or expertise in-house to roll out electrification or could it go to one of the German OEMs [original equipment manufacturers] and get into some kind of architecture?
24.
Given the change in volumes globally, JLR has a lot of capacity in its manufacturing footprint that it can’t fill. Do you think potential closures would make sense? Castle Bromwich seems to be the most obvious choice.
25.
The JLR situation seems to have evolved quickly over the last 9-12 months with significant underperformance of the market. You have mentioned structural issues at play that seem to have been here for 10-15 years such as quality and decisions for Jag in saloon architecture. Do you think it is just the market turning that has caused JLR to really face these issues or is it just other things catching up with it?
26.
Do you have any last comments on China, given that historically it has been where most of the EBIT has been made for JLR? Do you expect the change in pricing and the shift to locally produced Range Rovers to have a material impact on the profit pool for Range Rover in China?
27.
JLR’s portfolio has many models already and two new models launching this year. What would you do with this portfolio over the next 1-2 years?
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