JLR, formerly Jaguar Land Rover, is booming again after shaking off an extended period of financial gloom that started in China over five years ago and was compounded by the Covid crisis.
The company reported its highest quarterly profit in six years for the three months ending December 31 and posted an nine-month profit margin of 8.3%, putting it on course to beat the 7% it promised in the dark days of 2021 it would achieve for the full 2024 financial year ending March this year.
The turnaround has been fuelled by higher sales of its most profitable Range Rover, Range Rover Sport and Defender models, which the company can now build in sufficient enough quantities to generate healthy profits-before-tax (EBIT) of £1.5 billion in the nine months to the end of December.
With JLR continuing to forecast healthy returns up to its promised 10%+ margin by 2026, the company is poised to generate profit of over £2 billion for its financial year ending March 31. That puts it within touching distance of its company record of £2.6 billion recorded nine years ago for the year ending March 2015.
The sales profile of the company has changed since then. Nine years ago the best-selling model was the compact Range Rover Evoque, and it was about to be usurped by the newly launched Discovery Sport, both the Land Rover brand’s smallest models. For the last nine months however the Defender has led sales, followed by the Range Rover and Range Rover Sport.
In that time the average selling price of JLR’s cars has increased by almost £20,000 from £56,554 to £74,225 in the last quarter.
JLR’s mistake back then was to chase the German premiums with the goal of selling over a million a year, much of which was expected to come from Jaguar. Expenditures went up, but pricing power didn’t. The result was losses, the exit of the plan’s architect, Ralf Speth, and introduction of the Reimagine strategy with its promise to “target growth in our most profitable segments”.
It worked. The lower-priced models are still part of the JLR mix, but today the Defender sells more than triple the Evoque and over five times the Discovery Sport.
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