MINI: why JLR needs Rover in America.
Clive Goldthorp
MINI is currently going from strength to strength in the USA.
AROnline’s US Editor, Richard Truett, has just provided
details of the H1/2008 sales figures for Jaguar, Land Rover and MINI in America
and the statistics demonstrate the immediate impact of the $4 US gallon in a
pretty stark manner. The details are as follows:
| JLR vs MINI in the USA |
| Make |
H1/2007 |
H1/2008 |
| Jaguar |
8461 |
8381 |
| Land Rover |
22,842 |
16,492 |
| MINI |
19,759 |
26,400 |
MINI’s H1/2008 sales in America have increased by 33.6% when
compared to the same period last year. However, in sharp contrast, Jaguar and
Land Rover sales (which are now aggregated by Tata Motors Limited) show a decrease
of 20.5% when the figures for H1/2007 and H1/2008 are compared. The decrease
in Land Rover sales in H1/2008 alone represents a 27.8% fall on a year-on-year
basis.
Jim McDowell, Vice-President of MINI USA, has commented that: "The
last three months have been the best in our history as the significant structural
shift to small cars has brought into our dealerships a diverse range of vehicle
owners that currently drive large cars, SUVs and trucks. Our retailers tell
us these people recognise the combination of efficiency, great dynamics and
premium values MINI provides and it allows them to downsize their vehicle without
downsizing their aspirations. With very few cars remaining in inventory, our
dealers are focusing on taking orders for custom-built cars that will be delivered
to MINI drivers in July through September."
AROnline’s own, independent, research corroborates
Jim McDowell’s remark about current inventories in the American MINI Dealer
Network – MINI Dealers normally carry stocks of fifty or so units but
a website check has revealed that, as of last week, many only had between six
and fifteen new cars for sale. MINI’s American adventure really does seem
to be a case of having the right product in the right place at the right time…
However, “the significant structural shift” to which
MINI USA’s McDowell referred and the consequential decline in Land Rover
sales must, surely, have underlined the need for the combined Jaguar and Land
Rover (JLR) product portfolio to be expanded to cover a wider range of market
segments than at present.
Tata Motors Limited’s (TML) Chairman, Ratan Tata, certainly
seems to have created a very favourable impression during his recent visit to
America. See Lindsay Chappell’s
Automotive News article. Ratan Tata, TML’s Managing Director, Ravi
Kant, and JLR’s newly-appointed CEO, David Smith, all reportedly took
notes during their meetings with Jaguar and Land Rover Dealers on the East and
West Coasts but, amid all the talk of a switch from steel to aluminium components
to reduce vehicle weight and improve fuel consumption at Land Rover and of the
long-awaited new Jaguar XE (or XK-E), there seems to have been little, if any,
debate about whether and, if so, how to broaden the appeal of the two British
marques’ product portfolios beyond their current Future Product Programmes
and challenge MINI in addition to the likes of the new, America-bound, Alfa
Romeo Mi.To and the forthcoming Audi A1 and Saab 9-1.
With downward expansion of the Jaguar marque unlikely, should Tata go with Rover
in the USA?
The Jaguar X-TYPE’s relatively poor performance in and subsequent
withdrawal from the American market will, in all probability, preclude the now
TML-owned JLR from repeating Ford Motor’s ill-fated attempt to expand
Jaguar’s product portfolio downwards and that, in turn, leaves only one
other obvious option if America’s Jaguar and Land Rover Dealers are to
have a broader product range in their showrooms.
AROnline has already discussed the potential of a TML-inspired
Rover revival and how a four model Rover range might compliment Jaguar’s
Future Product Programme – see “Tata:
Ratan’s Rover revival?” 10th December, 2007 and “Ratan’s
plans: an integrated Jaguar and Rover?” 20th February, 2008 –
but opted not to raise “the Rover question” with any of the companies’
representatives prior to the completion of TML’s purchase of JLR.
However, now that the transaction has been concluded, AROnline
has put 'the Rover question. to a former senior executive at JLR with knowledge
of the companies’ future plans and, via a third party, to Don Hume, the
current Director of Corporate and Government Affairs at JLR. The former source
maintained that no consideration had been given to a Rover revival and added
that TML was against the idea because:
1) Rover was perceived to be a damaged brand,
2) Rover had been a strong brand in Britain but only had a very limited international
appeal and
3) the re-introduction of the Rover brand would result in confusion with SAIC
Motor’s (still nascent) Roewe brand.
Mr. Hume merely indicated that he had no knowledge of any consideration
being given to such a revival.
AROnline wonders whether or not the assertions at 1) and
2) above have actually been tested in any Brand Attitude and Awareness Surveys
in America, Britain and/or Europe and notes that similar issues have clearly
not prevented the Volkswagen Group from turning Skoda into an increasingly successful
international brand.
Skoda was a previously damaged brand, resuscitated by VAG.
A check of the Intellectual Property Office’s website confirms
that Land Rover UK now owns the key Rover Trade Marks so JLR would appear to
hold all the legal cards in any potential IPR dispute with SAIC Motors over
the latter’s use of the Roewe brand outside China. Ironically, many Americans
already refer to Land Rover as just Rover – see, for example, the previously
mentioned Automotive News article.
TML’s Annual Report was published on the company’s
website last Tuesday and, according to Rina Chandran’s subsequent
Reuters report, shares in the company fell 4.2% on the day and took the
year-to-date loss on the shares to 45%.
Chandran continues: “Tata Motors plans to raise $1.7 billion
from three rights issues to help fund the acquisition (of JLR), and is seeking
a further $500-$600 million from an overseas equity issue.
Investors have been rattled by the hefty fundraising plans, a bleak
outlook for commercial vehicle sales and cost overruns on the Nano plant to
more than 20 billion rupees ($460 million) from an earlier estimate of 17 billion
rupees.”
Ratan Tata recognises that Jaguar and Land Rover have “tremendous
unfulfilled market potential” but, for that potential to be maximised
in the present global economic climate, a Rover revival, which would enable
JLR to mimic MINI’s success in America, might just prove to be essential.
AROnline reckons that the senior executives at TML and JLR should now,
at the least, be asking 'the Rover question' themselves – that might even
help to allay the fears of TML’s existing and prospective investors.
Freelander is the baby of the LR range, but still considered a gas-guzzler by
fuel-conscious Americans...
[Editor’s Note: AROnline has no reason to doubt the
veracity of the information used in previous articles about a possible Rover
revival but that was from a source with no direct connection to either TML or
JLR.]
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