Thierry Bolloré’s decision to resign after only two years in the top job is a devastating blow to Jaguar Land Rover, and one I fear that could significantly jeopardise Jaguar’s survival.
Jaguar has clung on and survived so many dramatic threats since Sir William Lyons retired it will fill business trends analyses for years.
That survival story has been written, and re-written many times, and I have been witness to it all.
JLR is sitting on a precipice which could collapse beneath it, because all the major support systems car manufacturers depend on are slipping out of the company’s grasp – and whether Bolloré was the right man for the job, or not, matters little now.
In this post I will be confining my comments to Jaguar’s future.
Once the interim CEO, Adrian Mardell, who is also JLR’s CFO, gets into the CEO’s chair he will have to make decisions fast. The problem is that in the car industry it’s very hard to activate anything ‘immediately’, because there is a huge time lag between the idea and the execution. As you can imagine, there is no such thing in the car industry as things ‘happening overnight’ – that is, except firings, resignations and appointments.
So before delving into JLR’s myriad problems, let’s look at this resignation. First, let’s look at Thierry Bolloré. The recruitment process to replace the previous CEO Sir Ralf Speth, took six months, and many in the car industry were very surprised when Bolloré was appointed – given that after serving only nine months as CEO of Renault, he was unceremoniously dumped.
There are all sorts of reasons given, but one thing is clear, he is a very ‘prickly’ character. His brain is as sharp as a tack, and his reactions are just as sharp.
The best advice is don’t get on his bad side. He is not known for any examples of ‘charm offensives’. He is brusque (to the point of appearing rude); doesn’t suffer fools gladly, and will not tolerate poor performance. I know this, because I have met him, twice, at the Geneva Salon. I have spoken with him, and watched him in action at press conferences.
Thierry is very much cast in the ‘Ghosn Mould’ and is all about ‘getting things done’.
And, herein I think lays part of the answer for his truncated tenure at JLR. His manner has apparently upset both the Brits, and the Indians.
In addition, his ‘Reimagine’ plan was simply too ambitious for a car maker not only suffering from stalled sales, but also, his ‘Reimagine’ project caused major bust-ups with suppliers whom he was asking to make big investments to support the new plans.
The same suppliers to JLR are also suffering from parts shortages and lack of chips – just like all motor industry suppliers. However, it would appear many other luxury car companies (who also depend on chips for their expensive options) have been handling the chip crisis much more effectively.
It appears to me that there are currently too many loose ends within JLR that are not getting the attention they need. Bolloré may be a detail man when it comes to laying blame, but he is certainly not a man to get his hands dirty sweating the details of his plans – that’s for other people to do, and they had better do it right!
If the picture I have created of Thierry Bolloré reveals a ‘difficult man’ then I think I’ve got it right. He wants to achieve great things for JLR, but the trouble is there are many tiny elements not working out right; many pesky matters, like trying to deal with falling sales; a lack of attention to the ‘vision for the brands’, and lack of revenue to support investments and big changes.
Right now, there is so much to be done, and JLR doesn’t have a visionary CEO, nor the substance in the company to deliver any of the changes required for survival.
So, yes, I think there’s a very big possibility that JLR (especially Jaguar) will fail – and be ripe for picking it up at the right price – because Tata Group simply doesn’t have the available cash to save its British Baby. Although my mole in China tells me Tata has knocked back an offer from China's Geely.
Let’s look at some of the numbers which make me feel like this challenge is hopeless.
In his first few months Bolloré cancelled two BIG vehicle programs – the all-electric XJ large saloon, and the J-Pace EV SUV. They were signed off and ready to go into production. The asset and cash write-down from the cancellation is said to have cost JLR £1.5 billion!
That also meant that with no new models in the production pipeline, the Castle Bromwich plant would close, awaiting whatever new models came along with the ‘Reimagine’ projects!
More numbers. JLR is still losing money, with pre-tax losses for six consecutive quarters, whilst competitors were posting profits.
The latest results for the July to September quarter (2022) reveal a £178 million loss, which adds up to a mind-blowing total for this YTD an eye-watering £697 million!
JLR says it has a backlog of 200,000 orders it cannot fulfill – but unfulfilled orders don’t pay the bills, until the customers get their cars.
Sales of the Jaguar brand were at 17,340 units in the second quarter (2022) as against 19,248 units in the year-ago period, down 9.9 per cent. Land Rover division sales are doing better, thanks to the new Range Rover, and continued sales success of the new Defender.
But, JLR has not made a profit since 2018, despite bold plans to boost production to more than one million vehicles a year (*more on this later), in order to challenge the German Big Three.
The plan, which was introduced by Ralf Speth, would cost £25 billion - and increase vehicle production lines from seven to fourteen, boosting the workforce to more than 40,000! The plan expanded JLR too far, too fast - and the headcount grew exponentially, so when the downturn inevitably came Jaguar had a massive overhead to battle with.
Vehicle output was boosted significantly in the UK, India, Slovakia and Brazil, but the expected sales growth never materialized, plateauing at 614,309 in 2018, which resulted in turnover of £25 billion, and profits of £1.5 billion. Those were the last of the ‘Good Old Days’.
What followed was a sharper downturn in sales, investment write-offs, and thousands of job losses. All of which leaves the mood within JLR as extremely gloomy – albeit probably, frightening!
I suspect the Tata management, struggling to deal with the mess that Speth left behind, just lost interest in the ‘grand REIMAGINE plan’ and that could explain Bolloré's decision to leave ‘for personal reasons’. Sorry, mate. It’s not going to work!
However, there appears to be another factor deeply ingrained in some of Bolloré’s thinking. Insiders tell me that designer (sorry, Chief Creative Officer) Gerry McGovern has spent a huge amount of time and effort attempting to ingratiate himself with Bolloré.
Why? McGovern, whose ego runs a close second to people like Wolfgang Reitzle, wants to ‘show’ former Jaguar Design Directors, Ian Callum and the late Geoff Lawson, just ‘how’ a Jaguar should be designed!
This ego-driven approach to product decisions by McGovern could be seen, in step with Bolloré’s radical plans, to be the pivot which could probably spell the end of Jaguar.
Now, after devoting almost 20 years of my career to helping to sustain the Jaguar brand, let me put forward some personal views. They may not save the company, but I think they’re important to consider.
When Sir William Lyons started the ‘real’ Jaguar company (after the initial branding as SS) it competed with a couple of ultra-luxury brands – Rolls-Royce and Bentley – but given Lyons' tiny budgets and his tight-fisted control over expenditures and investment, Jaguar was a niche, luxury player.
Under Lyons’ leadership the cars boasted exceptionally-sporty performance and handling, wood, leather, a confident stance in the market and an image of :“You mean I get ALL THIS, for only £££ !
Jaguars were seen as a ‘luxury bargain’, with outstanding performance and handling. However, even in those heady days, as the company established its reputation, it was only selling to a tiny niche of the car market in Britain, and a few export markets. It simply wasn’t a BIG company – even though its reputation was becoming legendary.
Jaguars may have been cheaper than Bentley and Rolls-Royce’s finest, but they certainly were not mass-market cars, by any stretch of the imagination. So, however brilliant the reputation it was still a small company making cars for a small, but loyal following.
Here’s where I come in. I began working with Jaguar in Australia, as PR Manager, in 1977, after almost ten years as a freelance motoring journalist and editor of MODERN MOTOR magazine, soaking up all I could about brands, their performance, their sales and their reputations.
I always thought Jaguars were ‘pretty special’ and almost an ‘undiscovered gem’ and as I began to frame my PR messages and communications I focussed very strongly on the ‘exclusive’ nature of Jaguar ownership. My messages were created around an idea: “No, you may not be able to afford something more expensive, but just look at the Jaguar proposition and what it delivers.”
I instinctively knew we were dealing with a small niche, and so long as those owners were satisfied, we had thousands of loyal owners who would happily return; plus, their positive word of mouth slowly boosted sales. So, my PR messages then began to focus on the elements of success the brand was proud of – it’s motor racing victories (including Le Mans); its great road test stories written by journalists who loved the brand because of the performance-value for money equation, and promotion of celebrities who chose the brand – like Clark Gable, et al. All of which added to the emotional appeal of the Jaguar brand.
So, after revealing all this personal aggrandisement, what have I got to say about the immediate past, and current situation?
Jaguar was very successful as a niche player, with cars which were outstanding value for money, but they were still niche players.
Every car company which had any vision for Jaguar had the same stupid idea. Namely, if Jaguar can make money selling 30,000 cars a year, think how much it could make if it sold 100,000 cars a year?
And that’s where all of them, from Ford to Tata (and sadly, Jac Nasser and Thierry Bolloré) failed to see the reality of the brand’s status in the marketplace. Because that is what the punters who bought Jaguars thought about the brand. They (smartly) recognised its values.
When the Jaguar X-type was launched, I remember Jac Nasser forecasting Jaguar would build in excess of 40,000 X-types a year, and total production could reach 100,000 cars!
Of course, the 40K X-types p.a. was just a sop to the British Government, because Ford wanted to shut down some Ford factories and put off thousands.
Ford's response to the government, was that Jaguar would build a new luxury car at the Hailwood plant, and would continue employing Brits.
We all know what happened, the X-type was a commercial failure.
I think perhaps that's when Jaguar’s demise to where it is today probably started then.
The idea of Jaguar competing with Bentley, and the German trio is quite frankly a joke. The company doesn’t have the substance, the technical resource, nor the reputation to insert itself into that segment.
In my mind, after Tata took over it should have produced just three models – the F-type sports car; the XE mid-sized sedan, and the XJ saloon – with the i-Pace coming along to show the promise of electrification of just those models – and more, if there was demand.
The production output would have made them relatively scarce, boosting demand, and endowing Jaguars with the same reputation it enjoyed under William Lyons.
Now, the industry heavies are going to tell me that this scenario is just not possible. The costs of making competitive Jaguars in the sub-Premium segment is still expensive, demanding big investments, in order to get a profitable return. My response is, approach this scenario like Bill Lyons would. Lyons followed the maxim of 'restricting supply', from 1951-1972 - and Jaguar was profitable.
So in my mind it's a simple recipe: Make great cars which represent excellent value for money; don’t invest more than is sensible; keep an eye on overheads and expenses, and balance the company’s survival around the realisable profits from this modest plan. Don’t be greedy. After all, it does have stablemate Land Rover as a sort of ‘cash cow’.
I think Jaguar could still achieve a truly sustainable future if its ambitions (or the ambitions of its owner(s), were less ambitious than they have been.
I could be dead wrong, but Bill Lyons died a rich man, and Jaguar was making solid profits under his leadership.
PART TWO OF MY REVIEW OF JAGUAR FOLLOWS