One of the main reasons behind Jaguar Land Rover’s latest quarterly loss, according the British automaker, were the “challenging market conditions in China”. But, as AutoNews reports, there might be more to this story.
Sales of new cars in China in 2018 have declined for the first time in 28 years, but the premium market continued to grow, with brands like Audi, Mercedes, BMW, Cadillac, Volvo and Lexus increasing their stake in the world’s largest car market. JLR, on the other hand, saw its deliveries dropping by 22 percent.
According to the report, one of the biggest reasons for this is the weak quality control of the China-made Jaguar Land Rover models. The British manufacturer has established a local joint venture with Chery since 2014, building models there like the Range Rover Evoque, Land Rover Discovery, and the Jaguar XFL, XEL and E-Pace locally.
Product quality was insufficient from the beginning, with the number of defects increasing over the years, along with the complaints from customers. In 2017 alone, JLR had to carry out 13 recalls in China for issues ranging from the engines and the instrument panels to the airbags and batteries. The recalls affected around 106,000 vehicles, or 70 percent of annual sales in China.
In addition, owners of JLR models have been regularly protesting in front of their China headquarters in Shanghai since last August in order to bring attention to the issues they’re facing with their cars.
Local dealers have started selling imported Jaguar models at steep discounts that can reach up to 30 percent, spurring the creation of the catchphrase “Jaguar at 70 percent of the price”.
These problems have apparently put a dent to the image of Jaguar and Land Rover models in China, making them less attractive to local premium car buyers who, inadvertently, will turn to other premium brands. JLR, which has already slashed 1,000 jobs and will lay off a further 5,000 employees in order to save £2.5 billion ($3.2 billion) over the next two years, as part of a two programs instigated by parent company Tata Motors that are supposed to turn JLR’s fortunes around.