Former Premier Group

[RichardJensen]

 

Richard,

 

I am not disputing that the chinese market is drving down JLR profit, but I am disputing that their Drop in profit Was due to their investment in product.

 

As I believe was your assertion below, maybe I misunderstood you comment.

 

 

I'm sure that a portion of the decline in associated with new product launches, as would be the case at any manufacturing concern with significant first unit costs whether it be Ford, or Boeing, or whoever.

 

However, the larger issue with JLR is that Tata basically got Ford's engineering more or less for free. And they still had some really rough years to start with, and some good years, and now it looks like they're headed back into a rough patch again, and that's the story of JLR over what? the past 40 years?: They have good years and bad years, but the bad years always seem to take more than the good years give out. That's why JLR ended up separately getting bought out by BL, and why BL spun off Jaguar when it was having some good years, and why they ended up on the market a few years after that, and so on and so forth.

 

And now that JLR's hit yet another lean period, it's coinciding with some major engineering expenses that makes one wonder if they can ever pay their own way.

[Biker16]

 

I'm sure that a portion of the decline in associated with new product launches, as would be the case at any manufacturing concern with significant first unit costs whether it be Ford, or Boeing, or whoever.

 

However, the larger issue with JLR is that Tata basically got Ford's engineering more or less for free. And they still had some really rough years to start with, and some good years, and now it looks like they're headed back into a rough patch again, and that's the story of JLR over what? the past 40 years?: They have good years and bad years, but the bad years always seem to take more than the good years give out. That's why JLR ended up separately getting bought out by BL, and why BL spun off Jaguar when it was having some good years, and why they ended up on the market a few years after that, and so on and so forth.

 

And now that JLR's hit yet another lean period, it's coinciding with some major engineering expenses that makes one wonder if they can ever pay their own way.

 

For you to be right these new products would have to fail, I simply do not see that happening.

 

Jagaur's first SUV, and landrover will benifit from the decline in oil prices, and the strengthening of the EU economy.

[RichardJensen]

 

Ford had no idea what to do with a medium volume manufacturer like JLR..

 

the consequence of the failure of the X-type to meet projection was burdening a medium volume maker with the Debt and overhead of high volume maker. Of course they lost money. Ford's culture simply doesn't do small well.

 

They expected JLR to be self-funding. There is no other reason for them to exist.

 

What was clear to Ford management in 2000, and should be clear today as well: A 'medium volume manufacturer' which in the case of JLR was, IIRC, well under 300k units per year, is unsustainable without significant platform & powertrain sharing. You just can't make the math work when your competitors (BMW, VAG, MB, and even Toyota) are selling 3x & 4x as many vehicles.

 

The X-Type was an admittedly hamfisted attempt to do too much too soon, but the underlying logic is flawless: Jaguar could not pay its own way, it could not fund its own development. In order for it to be anything other than automotive royalty (lending cachet & consuming resources), it needed to share a significant amount of its underpinnings with Ford products.

[RichardJensen]

 

For you to be right these new products would have to fail, I simply do not see that happening.

 

Jagaur's first SUV, and landrover will benifit from the decline in oil prices, and the strengthening of the EU economy.

 

They don't have to fail for me to be right. They could sell like gangbusters for a few years, and you'd still be looking at exactly the same math: They're making dimes while BMW is making dollars. They still have to lean on Tata to fund the next platform because they can't, by themselves, keep up with BMW & MB.

[RichardJensen]

Think of it like this:

 

JLR = Tundra

 

BMW = F150

 

If Toyota's only product was the Tundra, how could they stay competitive with the F150? Where would they get the resources to match the R&D that goes into the F150?

[bzcat]

I think in retrospect, some Jaguar executives probably wish they pushed harder for a shortened DEW98 based X-Type instead of a simple new tophat on MK2 Mondeo.

 

They priorities were different back then (gain volume ASAP) and so the solution reflected that. Jaguar was losing money like crazy so the management had to get something that could be approved by Ford. And the Nasser era Ford was primarily interested in stock price performance linked management bonus rather than long term product planning. What Tata has now in place with the XE (which uses a shortened XF platform) makes sense.

 

This is where I disagree with biker's postmortem. It's not that Ford didn't know how to run a niche brand... during that time, Ford didn't know how to run a volume brand either. Remember that Nasser cancelled the Taurus program in favor of a butt-lift, and cancelled a new Ranger and the first iteration of GRWD program to drive up short term profit. And there were the disastrous QC problem and comically inept new car launch campaign with Focus and Escape. There were bad decisions made at Ford all over the place, but Ford was rolling in profit.

[Hugh]

I think in retrospect, some Jaguar executives probably wish they pushed harder for a shortened DEW98 based X-Type instead of a simple new tophat on MK2 Mondeo.

 

They priorities were different back then (gain volume ASAP) and so the solution reflected that. Jaguar was losing money like crazy so the management had to get something that could be approved by Ford. And the Nasser era Ford was primarily interested in stock price performance linked management bonus rather than long term product planning. What Tata has now in place with the XE (which uses a shortened XF platform) makes sense.

 

This is where I disagree with biker's postmortem. It's not that Ford didn't know how to run a niche brand... during that time, Ford didn't know how to run a volume brand either. Remember that Nasser cancelled the Taurus program in favor of a butt-lift, and cancelled a new Ranger and the first iteration of GRWD program to drive up short term profit. And there were the disastrous QC problem and comically inept new car launch campaign with Focus and Escape. There were bad decisions made at Ford all over the place, but Ford was rolling in profit.

Yes Ford was making profits and buying brand names for distinction. It looked good on paper and probably made the stock holders happy. It seemed like no one figured the rot coming on and probably didn't care.

[RichardJensen]

I think in retrospect, some Jaguar executives probably wish they pushed harder for a shortened DEW98 based X-Type instead of a simple new tophat on MK2 Mondeo.

 

I would like to meet a Jaguar exec from that era with some perspicacity. Just to find out what he thought about everyone else there.

 

BTW: regarding Ian Callum's claim that the XType was designed in Detroit, and that Jaguar designers didn't want it---I'm very much disinclined to believe that. I think that's Callum's way of deflecting blame for Jaguar's conservative design language away from Geoff Lawson. The XType fits in perfectly with the SType and the X350 XJ. They're peas in a pod. Either Geoff Lawson did absolutely nothing but draw a paycheck and stare out windows, or Jaguar by and large dictated its own conservative design language.

[jpd80]

And IIRC, Ford had very little say over Jaguar's styling decisions, the X-Type's top hat was designed by them, not Ford

and no matter how much Jaguar tries to deflect criticism, X-Type failed because of their input, not Ford's.

[Hugh]

That all said, I stress in my opinion I will not slag the Jaguar lineup. I'm pretty impressed, LR too. The PAG debate has been done to death. It's nice to revisit it once in a while.

[RichardJensen]

I guess I also wonder who in Dearborn would've been working on a Jaguar project? And how would that have been billed out? Also, it was built on the 1st gen. Mondeo platform, which was styled & engineered in Europe, so who in Dearborn was even familiar enough with that architecture to be able to put a Jaguar wrapping on it?

 

I mean, of course, Ford could veto any Jaguar decision, but the general sense I have is that what Jaguar wanted, they got: Expensive aluminum fabrication on the XJ? Yep. Crippled Lincoln LS? Check. Their own production facilities, strictly in the UK? Uh-huh.

 

And while Ford, on the whole, was on a bit of a retro kick at the time (T- Bird, Conti concept, etc.), Ford greenlighted the XK and XF, which were decidedly not retro.

[RichardJensen]

That all said, I stress in my opinion I will not slag the Jaguar lineup. I'm pretty impressed, LR too. The PAG debate has been done to death. It's nice to revisit it once in a while.

 

Oh, they're good cars. No doubt about it. But it's like Tesla: How are you going to keep up with companies that are that much larger than yours in such a capital intensive business?

[Hugh]

 

Oh, they're good cars. No doubt about it. But it's like Tesla: How are you going to keep up with companies that are that much larger than yours in such a capital intensive business?

I agree with what you are saying. I believe some car companies have large mentoring and money to achieve the goals and strategies. The cars are not the only product. For example, Tata Manufacturing, Fuji Heavy Industries and Hyundai Corp. Ford has never been and never will be a branch of a conglomerate that can push capital to one part to keep it going. I think most of us agree that JLR are not able to strike out on their own. I am of the opinion that the relationship of PAG was toxic from the start.

[SoonerLS]

...the general sense I have is that what Jaguar wanted, they got:

Years ago, Jag did a video on the XK220, and the head of Jaguar said pretty much that when discussing Ford's involvement in Jag.

[bzcat]

The only thing Jaguar didn't get was the F-Type... Nasser vetoed that one because it was very expensive. But that was after the X-Type was confined to FWD Mondeo platform. A more rational product planning may have resulted in X-Type and F-Type sharing a shortened DEW98 platform. I'm just repeating myself now so I will show myself the door...

 

The 2000 F-Type concept: http://www.carscoops.com/2011/06/they-should-have-built-it-2000-jaguar-f.html

[RichardJensen]

The only thing Jaguar didn't get was the F-Type... Nasser vetoed that one because it was very expensive.

 

And I could imagine some of the Jag managers insisting that things would've been *totally* different for the brand if they had gotten their low volume coupe project approved.

[Biker16]

 

They expected JLR to be self-funding. There is no other reason for them to exist.

 

What was clear to Ford management in 2000, and should be clear today as well: A 'medium volume manufacturer' which in the case of JLR was, IIRC, well under 300k units per year, is unsustainable without significant platform & powertrain sharing. You just can't make the math work when your competitors (BMW, VAG, MB, and even Toyota) are selling 3x & 4x as many vehicles.

 

The X-Type was an admittedly hamfisted attempt to do too much too soon, but the underlying logic is flawless: Jaguar could not pay its own way, it could not fund its own development. In order for it to be anything other than automotive royalty (lending cachet & consuming resources), it needed to share a significant amount of its underpinnings with Ford products.

 

using the high volume manufacturer math you are right, but medium volume makes like JLR you don't replace platforms as often,and those platforms require less capital and overhead to develop.

 

 

 

 

They don't have to fail for me to be right. They could sell like gangbusters for a few years, and you'd still be looking at exactly the same math: They're making dimes while BMW is making dollars. They still have to lean on Tata to fund the next platform because they can't, by themselves, keep up with BMW & MB.

 

They just developed a new platform that Spans, C-E and both AWD and RWD compatible. that could last them another 20 years before they are replaced. they are at the beginning of a new product cycle.

 

Re-skins are cheap and there profit outlook with F-pace and Land rovers based on the new architecture looks strong.

 

Think of it like this:

 

JLR = Tundra

 

BMW = F150

 

If Toyota's only product was the Tundra, how could they stay competitive with the F150? Where would they get the resources to match the R&D that goes into the F150?

 

The Tundra is profitable, just because the F-150 is more profitable doesn't mean Toyota will Stop making the Tundra.

[Deanh]

Biker...Tundra sales numbers should also be taken into acct...................they are dismal.

[J-150]

 

The Tundra is profitable, just because the F-150 is more profitable doesn't mean Toyota will Stop making the Tundra.

Has the Tundra even paid for its development or manufacturing facility yet?

[akirby]

 

And I could imagine some of the Jag managers insisting that things would've been *totally* different for the brand if they had gotten their low volume coupe project approved.

 

Where was Bob Lutz when they needed him?

[akirby]

Why would a Jag platform require less capital and overhead than a Ford platform?

 

Especially considering Ford gets more volume and more models from most of their platforms?

[J-150]

Why would a Jag platform require less capital and overhead than a Ford platform?

 

Especially considering Ford gets more volume and more models from most of their platforms?

If it is to cover C to E segments, multiple drive layouts, sedans and sports cars AND be competitive, I don't see how they can do it cheaper.

[Biker16]

Biker...Tundra sales numbers should also be taken into acct...................they are dismal.

 

but it is profitable at those sales numbers.

 

This is by definition how medium volume producers stay in business, they make a profit at lower sales volumes.

[Biker16]

If it is to cover C to E segments, multiple drive layouts, sedans and sports cars AND be competitive, I don't see how they can do it cheaper.

 

 

Its magic.

 

How can Space X deliver a satellite to orbit at lower cost than Boeing? Because Space X doesn't have the bureaucracy that those older companies have. conservatives rightly so blame the Regulations of government for making it more difficult to do business, the same is true of entrenched bureaucracies, where the process for doing even the simplest thing requires excessive amounts of Red tape.

 

It is much easier to develop products with a team of 500 than a team of 5000. or if You are only making a product in 1 plant, vs 10 plants with suppliers based all over the globe.

 

You also have to adjust the definition of a platform to be something less rigid, to one more flexible. sharing Power packs, Chassis modules, and electrical architectures is more important than sharing body panels.

 

there ios more than one way to build a car

 

VW MQB factory

 

 

Ford KCAP

 

https://www.youtube.com/watch?v=g5HuWSUxT_k

 

The biggest difference is notice how much Slower the VW plant moves vs the Ford plant.

 

VW and most Asian makers increase the Takt time where worker complete more tasks at each station, vs the F-150 plant where one person torques one part and the vehicle moves to the next station. it allows for very fast line speeds, but speed decreases substantially the more varied the product are. so for a line that makes simple and complex vehicles you can allow the worker more time to complete more complex tasks. This improves quality because the worker has more time to adapt to issues of fit finsh, and can see and Resolve quality issues before they leave his or her station.

[RichardJensen]

 

This is by definition how medium volume producers stay in business, they make a profit at lower sales volumes.

 

First of all, JLR is not a "medium volume producer"

 

If you chart out global auto manufacturers, you'll find JLR's volume at the small end. In fact, I know of no global manufacturer that has less volume than JLR.

 

Now if you say that JLR can draw off the resources of Tata, then you've indirectly made my point. The raison d'etre for JLR at Ford was to funnel profits back into the company, rather than draw off resources.

Edited September 17, 2015 by RichardJensen