After two years of chip shortages and Covid-related losses, Jaguar Land Rover returned to profit in the last quarter, with a pre-tax profit of £265 million. The success is driven largely by the three newest and hottest models – Range Rover, Range Rover Sport, and Defender.
The past two years have been incredibly tumultuous for Land Rover. A new CEO, Thierry Bolloré, came in in September 2020 to work to move the company towards electrification and modernization. In February 2021, he presented the new “Reimagine” strategic plan, which included electrified variants of every Land Rover model and an all-electric Jaguar that will compete with Bentley and Rolls-Royce.
But all the ideas in the world could not compensate for the on-the-ground issues automakers have had for two years, with the supply chain at any moment at the absolute brink of collapse. The lack of semiconductors prevented Land Rover from churning out red-hot Defenders, and then the highly-in-demand new Range Rover and Range Rover Sport, leading to a backlog of 215,000 orders of which 74% are for the three most popular models.
For the quarter, wholesale volumes totalled 79,591 vehicles, up 5.7% over the prior quarter and 15% over a year ago. All of these improvements were in spite of lockdowns and other restrictions in China, which impacted sales there. North American, UK, and Rest-of-World sales were strongest, with China and Europe down.
Of course, high-end versions of the new Range Rover massively helped to plug this gap. The Range Rover SV, which starts at $201,000 and climbs swiftly above a quarter-million dollars from there, is responsible for 5,000 orders since going on sale. The profit margins on these high-end trims are huge, and make up for weaknesses elsewhere to a degree.
The road ahead continues to be difficult. JLR is still a small automaker in a world where there has been massive consolidation, and partnerships thus are harder and harder to make. While the top three models sell incredibly well, other models are selling softer, and some lines like the Discovery need a rethink to remain viable models. But with profit coming back in the door, and relief ahead for the semiconductors industry giving hope to drawing down that 215,000-vehicle backlog, the road ahead still is certainly full of hope.
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