University of Westminster, WBS

Module title and code: Strategic Perspectives for Finance and Accounting (6MNST010W)

CASE STUDY: Jaguar Land Rover

Jaguar Land Rover History

Jaguar Land Rover is a company that brings together two much loved, highly
prestigious British car brands. After Tata Motors acquired Jaguar and Land Rover
from Ford in 2008, it merged the two marques into a single company and its success
has flourished, with memorable vehicles and innovative technologies that add to a
long-lasting legacy.

The origins of Jaguar can be traced back to a company that began by making
motorcycle sidecars in 1922.

The Swallow Sidecar Company later started building automobiles and moved to
Coventry, switching its name to Jaguar after the Second World War. It produced
premium saloons and sports cars, including the legendary XK120.

Around this time, Rover started to develop a new all-terrain vehicle, inspired by the
American Jeep. Lightweight and rustproof, the first Land Rover was clad in
aluminium alloy, due to the post-war steel shortage, and cost £450. It introduced 4x4
capabilities to road cars and was soon adopted by the military as well.

Adding to Jaguar’s reputation was its motorsport success in the 1950s, winning the
Le Mans 24 Hours race twice with a C-type – in 1951 and again in 1953 – and then
with a D-type in 1955, 1956 and 1957. In 1961, the company launched what became
perhaps the most iconic sports car of all time, the E-type. In 1968 it merged with
BMC (British Motor Corporation), which later became part of British Leyland and
included Rover.

With an increasing demand for recreational off-roaders, the Range Rover made its
debut in 1970. So popular was the new car that British Leyland made Land Rover a
standalone company in 1978. Very little about the first Range Rover was altered over
the years – 1981 introduced a four-door, while a diesel arrived in 1986. As Range
Rover increasingly became perceived as being more upmarket, the Land Rover
Discovery was launched in 1988 as a third model.

After splitting from British Leyland, Jaguar became independent again in the 1980s,
before being purchased by Ford in 1989. Land Rover, meanwhile, was bought by
BMW in 1994, which expanded the range further by introducing the Freelander. It
then joined Jaguar under Ford in 2000, with the two companies becoming closely
linked, sharing engineering knowledge and facilities.

In 2008, the two were bought by Tata Motors, India’s largest automobile
manufacturer, and officially joined together as one company in 2013. Global sales
and profits had risen year on year since then until 2018. However, revenues have
consistently decreased in the last three years (See Figure 1 below).

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University of Westminster, WBS
Module title and code: Strategic Perspectives for Finance and Accounting (6MNST010W)

Figure 1: Annual Global Sales Revenue of the British Brand Jaguar Land Rover from
2011 to 2021 (in million GBP)

Figure source: [Link]

Innovation

Innovation plays an important part of Jaguar Land Rover. The company advertises
that they are creating ‘Technology with Heart’. In the future Jaguar plans to built cars
that drive themselves, and the vehicles that are shared, not owned. The fully
autonomous virtual concept imagines mobility for the connected world of tomorrow,
where Jaguar customers can summon a fully-charged FUTURE-TYPE on-demand.
At the heart of the concept is the world’s first intelligent, connected and removable
steering wheel. This steering wheel doesn’t just stay in your car. It lives in your home
and becomes your trusted companion. Sayer – named after the designer of the E-
type – is the first voice activated AI steering wheel that will be able to carry out
hundreds of tasks.

Jaguar Land Rover has committed to long-term investment into autonomous,

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University of Westminster, WBS
Module title and code: Strategic Perspectives for Finance and Accounting (6MNST010W)

Challenges

Government policies affect

Despite Jaguar Land Rover success in the past, the current UK environment
presents challenges. Since 2017 the UK domestic sales have dropped amid
confusion about the Government’s policy towards fuel and the diesel tax. The
industry was affected by UK ministers announcing a ban on cars with conventional
engines by 2040. In November 2017 the government has also changed the tax on
the sale of new diesels because of pollution concerns. This has caused a decline in
sales of new cars powered by diesel. In addition to that Brexit worries have impacted
sales in the UK and EU, as customers do not necessarily hurry to invest in expensive
cars during times of uncertainty. The sales were also affected in China because of
the US – China economic trade wars in 2017-18.

Covid-19 pandemic affect

Since 2020 Jaguar Land Rover sales were impacted by Covid-19, forcing the
company to suspend production in the UK. By October 2020 the sales started to
improve, which allowed Jaguar Land Rover to resume its production with strict
protocols to ensure social distancing and health impacting measures. By December
2021 Jaguar Land Rover global sales grew, especially because of reopening of
Chinese economy after the lockdowns. In the last quarter of 2021, the company’s
revenue increased to £4.7 billion, while its pre-tax margin increased to 1.4% and its
free cash flow to £164 million. However, pre-tax profits came in at £9 million loss,
which contrasts with a £439 million pre-tax profit in the same period the year before.
In 2021 JLR experienced disruption in its supply chain of computer chips. The
shortages in the semiconductor industry that were caused by Covid-19 pandemic
forced the company to pause production of its cars. Ongoing chip shortage in the
industry resulted in restricted sales. In the last quarter of 2021 retail sales fell to
80,126 vehicles, which is 36.6% les than in the same period in 2020.

JLR Reputation
Even though financially the company is not struggling Jaguar Land Rover continues
to experience challenges indirectly influencing its reputation. For example, despite
the strict hygiene and social distancing protocols one of the plants in the West
Midlands has been hit by a coronavirus outbreak when 24 employees testing
positively for Covid-19 in September 2020.
Another recent scandal that affected the company is the Jaguar Land Rover tribunal
case that found in favour of gender-fluid worker, who claimed that they were
harassed and lacked support from managers. As a result a gender-fluid worker has
won £180,000 in compensation from her former employer Jaguar Land Rover.

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University of Westminster, WBS
Module title and code: Strategic Perspectives for Finance and Accounting (6MNST010W)

Questions:

Do additional research about the UK car manufacturing industry.

Using the frameworks of PESTEL and Porter’s 5 Forces evaluate the external
environment of the car industry in which Jaguar Land Rover operates.

What advice would you give to Jaguar Land Rover about the industry’s opportunities
and challenges that they operate in? What strategic moves do you think the
company should adopt in the nearest and long-term future to address the external
environment?