JAGUAR LAND ROVER SA UPBEAT ABOUT PROSPECTS FOR FUTURE

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Although customers will be unaffected by Tata Holdings’ acquisition of Jaguar and Land Rover from Ford, there are significant behind-the-scenes developments at Jaguar Land Rover South Africa.

Following the purchase of Jaguar and Land Rover by Tata Holdings, Jaguar Land Rover will become one of three automotive legs within the holding company, the other two being Tata Trucks and Buses and Tata Motors. Jaguar Land Rover South Africa will form an entirely new and separate entity under TATA Africa Holdings with no relationship to Tata Motors at all. Ownership of the company will pass to TATA Africa Holdings on completion of all local regulatory requirements.

TATA Africa Holdings has a significant footprint on the African continent, with a strong presence in over 10 countries. It is a subsidiary of Tata International, a global company with a turnover of US$1.6 billion. Tata Africa Holdings generated total revenues of US$210 million in 2006, and it has invested over US$100 million on the continent.

From the organisations structural perspective nothing changes. TATA has elected to retain the existing executive Jaguar Land Rover team who will continue to run the two brands as they have done under the ownership of Ford. Andrew Daniel, Managing Director for Jaguar Land Rover South Africa, will continue to manage both brands in South Africa and Sub Saharan Africa. The existing management reporting structures for Jaguar Land Rover South Africa remain unchanged.

What will however change is the brand grouping. Until now, Jaguar and Land Rover were part of a suite of brands, from here on forward the will exist as totally independent brands. Throughout the world, Jaguar Land Rover will operate independently of Tata. “While we are confident that we can forge a strong working relationship with our new parent company, the South African operations will remain completely separate. Furthermore, Tata has indicated that it will be a case of ‘business as usual’ at Jaguar Land Rover. There will be no significant changes to the business, its leadership or product development plans. Importantly, the entire Jaguar Land Rover board has been kept in place,” Daniel explains.

Ratan Tata, chairman of Tata Sons and Tata Motors, concurs:  “We have enormous respect for the two brands and will endeavour to preserve and build on their heritage and competitiveness, keeping their identities intact. We aim to support their growth, while holding true to our principles of allowing the management and employees to bring their experience and expertise to bear on the growth of the business.”

Daniel comments that Tata Motors’ purchase of the Jaguar Land Rover operations made financial sense. “Ford needs to focus on its core brand and its return to profitability. Jaguar Land Rover, on the other hand, needs to build on its current position of strength in the marketplace: both brands are successful, healthy and profitable. The Jaguar Land Rover team was consulted extensively prior to the acquisition and we are confident that it will benefit our brands. They will be less constrained and be more visible individually than they have been for a long time,” Daniel comments.

The acquisition of Jaguar Land Rover South Africa by Tata will necessitate a move to new premises in the short to medium term. “We are in the process of investigating new premises and are currently considering the Centurion/Pretoria area. Our move is anticipated to occur within the first quarter of 2009,” comments Daniel. Practical issues dictate that the move cannot take place sooner: for instance, while Land Rover currently operates the SAP business system, Jaguar uses a Ford system. Therefore, Jaguar will have to convert to SAP before it is able to completely separate from Ford Motor Company of Southern Africa.

He says that customers will not be affected by the acquisition in any way. “All existing warranties, maintenance agreements and other after sales support processes will remain in tact. Service levels and the unique brand experiences will remain the same. The planned product line ups do not change and all planned launches and new model introductions will continue.”

From a retail perspective, new dealer agreements will need to be signed. Other than that, it will be business as usual. “There are a number of dealers who share premises with other brands. This will not change, as we do not see any of those brands as direct competitors. Our dealer network structure will not change within the foreseeable future,” says Daniel.

Existing relationships with suppliers could continue; however Jaguar Land Rover South Africa may seek new, independent suppliers in the future. For example, the parts and accessories warehouse is being relocated to Rosslyn from the Ford Silverton plant in a warehousing and distribution partnership with UTI.

An additional eight members of staff will be appointed in order to deliver support services currently being supplied by Ford Motor Company of Southern Africa. “We will retain all our existing staff members. Part of the rationale for looking for premises within the Pretoria area is due to staff who reside in the area and our desire is to retain our qualified staff.”

Turning to the future, Daniel is optimistic about local prospects for the Jaguar and Land Rover brands. “The two brands are resilient in the face of tough trading conditions. It is common knowledge that 2008 has been – and will continue to be – a difficult year for the South African motor industry. However, our two brands have proved to be remarkably impervious to the challenging market conditions,” he notes.

According to Daniel, Jaguar and Land Rover have bucked the trend because they are premium brands. “A mere one thousand motorists will be fortunate enough to acquire a Jaguar, whilst we are aiming for six thousand Land Rover vehicle sales this year.”

Sales have been boosted with the introduction of new models like the Jaguar XF and by the fact that the typical premium customer is not greatly impacted by rising interest rates, inflation rates or fuel prices. “Our customers are business and opinion leaders. They also tend to be very discerning and insightful and have therefore bought into where the brands are moving to.

Of course, issues such as interest rate hikes are important for our customers. However, whereas they will influence the buying decision of the more cost sensitive motorist, they will not cause our customers to delay or cancel a purchase.” he explains.

Land Rover enjoyed massive success in the first quarter of 2008, posting 1 389 sales, an increase of 16.8% over 2007. December 2007 (674) was an all-time sales record for the brand in South Africa while January, February and April 2008 were records for those specific months. According to Daniel, Land Rover’s success can be attributed to two factors: product and attitude. “When it comes to product, there is no doubt that each of the five name plates is seen as the benchmark in its category. This is any automotive marketer’s dream,” he notes.

Attitudes of the dealers and staff to the brands have changed completely. “They are confident in the future of the company, the product’s desirability and the health of the franchise. They act and behave like winners, which is precisely what they are. There has been a mind shift in the whole network – we have moved from followers to winners; and that attitude has translated into sales,” Daniel reveals.

The local performance of both brands is being mirrored on a global basis. Jaguar, which last year celebrated its 85th anniversary, is scaling new heights in terms of profit and volume. The profitability of Jaguar is a direct result of the launch of the XF. Since it was first revealed at the Frankfurt Motor Show in September last year, the XF has won no fewer than 12 major international awards. These include Car of the Year awards from What Diesel Magazine, What Car? Magazine and The Sun Motoring. Autocar named it their ‘Design of the Year’, Top Gear hailed it their ‘Limo of the Year’ and it won Fleet World’s ‘Design of the Year Editor’s Award’.

The XF has not only been a success in the hearts and minds of journalists. Customers are patiently waiting for their vehicle to come off the six month world wide waiting list.

Land Rover is also experiencing notable success, and 2007 was the best year in its 60-year history. For the first time, the company drove through the 200 000 sales barrier. A total of 226 395 vehicles were sold around the world in 2007; an increase of 17.6% on the previous year. Confidence is high – and the company is firmly in the black.
Emerging markets continued to show their potential with sales in Russia climbing 96% to 12 268, and by 143% in China to reach 6 573 units. Land Rover also achieved record sales in the United States, Canada, Spain and Ireland. In the United Kingdom, Land Rover achieved over 50 000 sales for the first time in its 60 years of existence. The Freelander 2 (Land Rover’s most efficient car to date) and the turbo diesel V8 in Range Rover Sport and Range Rover (which delivers petrol-like performance but with a 32% fuel improvement) have particularly bolstered sales.
While Jaguar Land Rover has a new parent company, it will not be a case of a complete parting of the ways with Ford. “We will continue sourcing powertrains, stampings and other vehicle components from Ford.  Ford also has committed to provide engineering support, including research and development, plus information technology, accounting and other services.”

Daniel says the Jaguar and Land Rover brands will, in the future, enjoy the best of both worlds. “On the one hand, we have the complete support and continuity afforded to Jaguar Land Rover by our ongoing relationship with Ford. On the other hand, we now have access to immense resources, thanks to our new parent company, which is willing and able to invest in our two brands. As such, we look forward to a bright and successful future for both Jaguar and Land Rover,” concludes Daniel.