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New models drive Jaguar Land Rover to record profits

Jaguar Land Rover saw its investment in new technology and product launches pay off this week as the company reported record profits of £1.67bn.

The UK-based premium car manufacturer said its pre-tax annual profits were up 11 per cent in 2012 and reported record sales (up 22 per cent) and revenues (up 17 per cent), driven by growth in all regions including a 48 per cent increase in China.

The firm pointed to the launch of its all-aluminium Range Rover and several Jaguar models including the new F-Type as a major factor in the growth that has outstripped even the strong performance by the rest of the UK’s automotive sector in the last year.

‘The positive result for the financial year demonstrates that we have strong demand for our great, solid product portfolio all around the world,’ said JLR CEO Dr Ralf Speth, in a statement.

‘Jaguar Land Rover invested significantly in the product creation process, in our advanced manufacturing sites and created more than 3,000 jobs.

‘This commitment is set to continue with a sustained programme of investment which will see us spend in the region of £2.75bn on new product, people and infrastructure in the year to March 2014.’

Phil Harrold, a partner at PwC’s automotive practice, said JLR had seen significantly above average growth in most markets, particularly in Europe where sales had risen by 18 per cent compared to general sales that only began rising in April after a 18-month slump.

‘BMW have put out warnings that they’re going to have a tough year and they’re in the same premium segment as JLR, so even within that executive end of the market you’re finding people struggling,’ he told The Engineer.

This was partly due to the company’s investment in research and development, he added. ‘But don’t underestimate the marketing side of it. The classic example of that is the Evoque small off-roader: it’s not that technically different from others in the stable but in terms of the sheer marketing attractiveness it really has been quite phenomenal.’

JLR’s UK sales were up 20 per cent, leading a resurgent UK car market that was almost 15 per cent bigger in April than it was in the same month last year. Car manufacturing output in the UK has grown by a similar amount.

JLR sales in North America have also risen nine per cent – above market average – while growth in China reached 48 per cent, despite a reported slowdown in the Chinese appetite for luxury goods.

‘The slowdown is in growth not sales,’ said Harrold. ‘The Chinese economy is still growing at eight per cent a year. Whilst the economy might slow a bit, you’re still looking at a brand that’s growing massively above that. So it’s not just economic growth: it’s something around the brand image, the decision to buy British.’

JLR last year announced it was building a factory in China to help meet growing demand, but Harrold said that international growth met by foreign plants would still benefit the UK manufacturing sector.

‘They’re moving to foreign-based assembly. But everything else will be delivered in as a component. So although you have an assembly plant in China, it could well be that some of the parts come from the UK.’

Readers' comments (1)

  • Well done JLR!

    What does this prove: that given the funding and a proactive management structure British design and manufacture is amongst the best in the world.

    The state, investment funds and industry leaders need to recognise that cut throat competition is bad for long term pofitability. One can only invest in the training and research when one has the cash. Product development is a massive investment and requires deep pockets. You only get deep pockets when profitability is good.

    Constant penny pinching, driving costs lower and focus on short-term shareholder returns inevitably hollows out industry. There isn't the cash to invest in training and innovation meaning product quality drops, capability declines and eventually comptitive edge disappears. Either the company dies or is taken-over.

    Isn't this the story of British industry in the last 20 years?

    How do we think the industrial giants of India, continental Europe and the US, not to mention China have grown? Highly benign local markets, maybe not protected but pretty close to being so permit companies with proactive management to grow, invest and develop new products.

    Unless we act, companies like JLR will only flourish under foreign ownership meaning foreign owners will receive the profits, which is certainly not a sustainable way to run a country.

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