Mike Rutherford believes that instead of adopting the successful business models of VW-Audi, Toyota-Lexus, and Hyundai-Kia, JLR is heading in a different direction.
UK car manufacturing numbers have seen a significant drop recently. In June, the sector experienced a 27% decrease compared to June 2023, which is a serious concern for the British automotive industry.
The Society of Motor Manufacturers and Traders (SMMT) has attributed these disappointing figures to anticipated factors such as multiple model changes and factory repurposing. They also highlight that manufacturers are retooling production lines to accommodate electric vehicles. While these explanations provide some context, they do not address the more profound, long-term challenges facing the industry.
The UK is competing with established automotive giants like Japan, Germany, South Korea, Spain, the USA, and France, who consistently produce more vehicles and are likely to continue doing so. Additionally, emerging players such as China and India are significantly advancing in car production, along with Brazil, the Czech Republic, Indonesia, and Slovakia. Even countries like Iran and Turkey have surpassed the UK in terms of production output.
Germany, Japan, and South Korea are well-regarded for their extensive and efficient car manufacturing, focusing on producing a high volume of both non-premium and premium vehicles. This approach supports thousands of jobs, millions of sales, and substantial profits. The production of luxury cars, while profitable, is less central to their strategies. For instance, Volkswagen-Audi, Toyota-Lexus, and Hyundai-Kia prioritize mass production and moderate profits per unit over limited production of high-margin luxury vehicles.
In contrast, Jaguar Land Rover (JLR), the UK’s prominent automotive producer, is shifting its focus more towards luxury cars. This strategy, while lucrative in the short term, results in lower overall production volumes. Consequently, the UK’s position in global car manufacturing is likely to decline further. Last year, UK car production was about half of what it was five years ago, and despite efforts to boost electric vehicle production, it is projected to remain lower in 2024 compared to 2023.
The underlying issue is clear: while JLR’s luxury focus might yield high margins, it does not counterbalance the UK’s declining overall production and global competitiveness in the automotive industry.
