4 5 7 SAMPLE - IHS Markit...Total retail sales for FY2012/13 were just under 375,000 units, compared...
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2013 edition 2 © 2013 IHS IHS Automotive | Supplying Jaguar Land Rover COPYRIGHT NOTICE AND LEGAL DISCLAIMER © 2013 IHS. No portion of this report may be reproduced, reused, or otherwise distributed in any form without prior written consent, with the exception of any internal client distribution as may be permitted in the license agreement between client and IHS. Content reproduced or redistributed with IHS permission must display IHS legal notices and attributions of authorship. The information contained herein is from sources considered reliable but its accuracy and completeness are not warranted, nor are the opinions and analyses which are based upon it, and to the extent permitted by law, IHS shall not be liable for any errors or omissions or any loss, damage or expense incurred by reliance on information or any statement contained herein. For more information, please contact IHS at [email protected], +1 800 IHS CARE (from North American locations), or +44 (0) 1344 328 300 (from outside North America). All products, company names or other marks appearing in this publication are the trademarks and property of IHS or their respective owners. IHS Automotive SupplierBusiness Contents Overview .......................................................................................................................................................................... 4 Global market overview .............................................................................................................................................. 4 Jaguar Land Rover financial data .............................................................................................................................. 4 Brief company history .................................................................................................................................................... 5 Introduction ..................................................................................................................................................................... 6 Recent developments at JLR – rising profits and global expansion ..................................................................... 7 Model line-up and production forecast ....................................................................................................................... 9 Jaguar ........................................................................................................................................................................... 9 Land Rover.................................................................................................................................................................... 9 Principal manufacturing facilities ............................................................................................................................... 11 UK focus ..................................................................................................................................................................... 11 Significant investment in UK manufacturing facilities....................................................................................................11 Overseas CKD operations ....................................................................................................................................... 12 Expansion into China ................................................................................................................................................. 13 Manufacturing in Saudi Arabia a long term possibility ................................................................................................. 13 Purchasing policy ......................................................................................................................................................... 15 Increased UK sourcing ............................................................................................................................................. 15 Further growth opportunities for suppliers ........................................................................................................... 16 Recent supplier investment announcements in the UK............................................................................................... 18 Interview ....................................................................................................................................................................... 19 David Allen, JLR Purchasing ................................................................................................................................... 19 Continued growth with JLR’s purchasing function ................................................................................................. 27 The skills issue and the challenges this poses ...................................................................................................... 27 Supplier Finance ........................................................................................................................................................ 29 Access to Finance – an Automotive Council Workstream ........................................................................................... 30 Logistics..................................................................................................................................................................... 30 The SupplierBusiness SuRe (Supplier Relationship) Index .................................................................................... 32 Methodology ............................................................................................................................................................. 32 Scoring ...................................................................................................................................................................... 32 Sample size................................................................................................................................................................ 32 Respondent categories ............................................................................................................................................. 32 JLR specific findings ................................................................................................................................................. 33 Profit Potential ............................................................................................................................................................ 34 Organisation ............................................................................................................................................................... 35 Trust ........................................................................................................................................................................... 36 Outlook ...................................................................................................................................................................... 37 Forward model programmes....................................................................................................................................... 38 Major Suppliers ............................................................................................................................................................. 39 Selected suppliers to JLR Halewood ..................................................................................................................... 39 Cutaways .................................................................................................................................................................... 39 New Range Rover ...................................................................................................................................................... 39 New Jaguar F type ..................................................................................................................................................... 40 Who-Supplies-Whom Data ....................................................................................................................................... 40 SAMPLE
Transcript of 4 5 7 SAMPLE - IHS Markit...Total retail sales for FY2012/13 were just under 375,000 units, compared...
2013 edition 2 © 2013 IHS
IHS Automotive | Supplying Jaguar Land Rover
COPYRIGHT NOTICE AND LEGAL DISCLAIMER© 2013 IHS. No portion of this report may be reproduced, reused, or otherwise distributed in any form without prior written consent, with the exception of any internal client distribution as may be permitted in the license agreement between client and IHS. Content reproduced or redistributed with IHS permission must display IHS legal notices and attributions of authorship. The information contained herein is from sources considered reliable but its accuracy and completeness are not warranted, nor are the opinions and analyses which are based upon it, and to the extent permitted by law, IHS shall not be liable for any errors or omissions or any loss, damage or expense incurred by reliance on information or any statement contained herein. For more information, please contact IHS at [email protected], +1 800 IHS CARE (from North American locations), or +44 (0) 1344 328 300 (from outside North America). All products, company names or other marks appearing in this publication are the trademarks and property of IHS or their respective owners.
IHS AutomotiveSupplierBusiness
ContentsOverview .......................................................................................................................................................................... 4
Global market overview .............................................................................................................................................. 4Jaguar Land Rover financial data .............................................................................................................................. 4
Brief company history .................................................................................................................................................... 5Introduction ..................................................................................................................................................................... 6
Recent developments at JLR – rising profits and global expansion ..................................................................... 7Model line-up and production forecast ....................................................................................................................... 9
Jaguar ........................................................................................................................................................................... 9Land Rover .................................................................................................................................................................... 9
Principal manufacturing facilities ............................................................................................................................... 11UK focus ..................................................................................................................................................................... 11
Significant investment in UK manufacturing facilities ....................................................................................................11Overseas CKD operations ....................................................................................................................................... 12
Expansion into China ................................................................................................................................................. 13Manufacturing in Saudi Arabia a long term possibility ................................................................................................. 13
Purchasing policy ......................................................................................................................................................... 15Increased UK sourcing ............................................................................................................................................. 15Further growth opportunities for suppliers ........................................................................................................... 16
Recent supplier investment announcements in the UK ............................................................................................... 18Interview ....................................................................................................................................................................... 19
David Allen, JLR Purchasing ................................................................................................................................... 19Continued growth with JLR’s purchasing function ................................................................................................. 27
The skills issue and the challenges this poses ...................................................................................................... 27Supplier Finance ........................................................................................................................................................ 29
Access to Finance – an Automotive Council Workstream ........................................................................................... 30Logistics ..................................................................................................................................................................... 30
The SupplierBusiness SuRe (Supplier Relationship) Index .................................................................................... 32Methodology ............................................................................................................................................................. 32
Scoring ...................................................................................................................................................................... 32Sample size ................................................................................................................................................................ 32Respondent categories ............................................................................................................................................. 32
JLR specific findings ................................................................................................................................................. 33Profit Potential ............................................................................................................................................................ 34Organisation ............................................................................................................................................................... 35Trust ........................................................................................................................................................................... 36Outlook ...................................................................................................................................................................... 37
Forward model programmes ....................................................................................................................................... 38Major Suppliers ............................................................................................................................................................. 39
Selected suppliers to JLR Halewood ..................................................................................................................... 39Cutaways .................................................................................................................................................................... 39
New Range Rover ...................................................................................................................................................... 39New Jaguar F type ..................................................................................................................................................... 40
Who-Supplies-Whom Data ....................................................................................................................................... 40
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IHS Automotive | Supplying Jaguar Land Rover
FiguresFigure 1: Global light vehicle sales, 2006-2012 .......................................................................................................... 4Figure 2: Global annual sales for the Jaguar Land Rover vehicle range 2002-2014 ............................................... 8Figure 3: Jaguar and Land Rover global production volumes 2005 - 2016............................................................ 10Figure 4: Jaguar Land Rover’s engine manufacturing centre ................................................................................. 11Figure 5: Jaguar Land Rover vehicle production by plant in 2012 .......................................................................... 12Figure 6: The first Freelanders leave the Pune assembly line in May 2011 ........................................................... 13Figure 16: Ian Harnett, director of JLR purchasing, is committed to strengthening the UK supply base ........ 16Figure 17: Robert Johnson sees major opportunities for UK suppliers in the years ahead ................................ 28Figure 7: Jaguar Land Rover’s Halewood plant - Body-in-White section .............................................................. 29Figure 8: F-TYPE vehicles leaving Castle Bromwich by train .................................................................................. 31Figure 9: 2012-2013 Profit potential results on scale ............................................................................................... 34Figure 10: 2012-2013 “Organisation” results on scale ............................................................................................. 35Figure 11: 2012-2013 “Trust” results on scale ........................................................................................................... 36Figure 12: 2012-2013 “Outlook” results on scale ...................................................................................................... 37Figure 13: Jaguar Land Rover - Forward Model Programme (by Global Nameplate) .......................................... 38Figure 14: Suppliers to the new Range Rover ........................................................................................................... 39Figure 15: Suppliers to the new Jaguar F Type ......................................................................................................... 40
TablesTable 1: Key Jaguar Land Rover financial performance values ................................................................................ 4Table 2: Jaguar Model Cycle Plans ............................................................................................................................... 9Table 3: Land Rover Model Cycle Plans ....................................................................................................................... 9Table 4: Global Jaguar Land Rover production projections (by Platform) 2013 and 2018 ................................... 10Table 5: Jaguar Land Rover - Model production by plant 2012 - 2016 ................................................................... 14Table 6: Components which UK VMs would like to source in the UK, with estimated annual value ................. 16Table 7: Selected recent investments by UK component suppliers ....................................................................... 18Table 8: Who -Supplies-Whom - Jaguar Land Rover ................................................................................................ 40
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2013 edition 6 © 2013 IHS
IHS Automotive | Supplying Jaguar Land Rover
IntroductionJaguar Land Rover is one of the great success stories of the UK automotive industry in recent times. Moreover, it has begun the process of transforming itself from a relatively small, niche, UK-based supplier into potentially a major player in the premium automotive market. The last few years have seen a continuous rise in UK production – with some suggestions that at its two main sites, Solihull and Halewood, it could soon face capacity constraints. In parallel, expansion overseas has started, first with CKD assembly operations in India; full scale production in China is now in preparation and longer term, production in Saudi Arabia (which would be first case of vehicle production in that country) is now being evaluated.
The last couple of years have seen strong growth in production and sales, especially of Land Rover models and buoyed by this strong sales performance, the company is now engaged in a substantial investment programme, with around UK£2.75bn to be invested in new products and its manufacturing facilities in 2013 alone, with further investment to follow in the years ahead. The next few years will see significant further growth in production volumes in the UK and overseas; it will also see expansion of the company’s product range, with both the Jaguar and Land Rover brands expected to expand into new segments and developing production in new geographic markets.
Total production in 2012 was almost 369,000 units (according to IHS) and this is forecast to reach around 456,000 in 2017 in the UK. At this point, JLR production outside the UK is conservatively projected to be around 36,000, primarily in China, according to the latest IHS Automotive forecasts.
JLR is a wholly-owned subsidiary of Tata Motors of India, having become part of the Tata group in 2008 when it was acquired from Ford. After an uncertain period immediately following the acquisition by Tata, JLR has firmly established itself as the largest automotive company in the UK, employing more than 26,000 people in the country (this represents an increase of around 44% from 18,000 in 2010/11). The company claims that it supports as many as 190,000 jobs in the UK’s wider economy, with 80,000 in the supply chain alone. The company is profitable, reporting profits before tax in 2012/13 of nearly UK£1.7bn, up 11%, on revenues of UK£15.8bn, up 17% year-on-year. The company reported a cash-rich balance sheet when releasing its 2012/13 results, with cash and financial deposits of over UK£2.8bn and undrawn credit lines of more than UK£860mn.
The company is a major contributor to UK vehicle exports with its export ratio running at around 85%, selling vehicles in nearly 180 markets worldwide. Total retail sales for FY2012/13 were just under 375,000 units, compared to just under 306,000 units in 2011/12.
In terms of export destinations, North American sales were up 9%, Chinese sales were up 48% (due in large part to the success of the Range Rover Evoque), European sales (excluding the UK) rose 18%, and Asia Pacific sales (excluding China) were up 27%. UK sales were up 20%.
As well as being a significant contributor to the UK’s manufacturing activity, it is the largest UK automotive R&D investor, with around UK£1bn invested in pure R&D in 2013. As noted above, total R&D and capital investment will be around UK£2.75bn in 2013 alone, with more investment expected to be made in the next few years – the 2013 investment represents a rise of over 140% from the UK£900mn invested in 2009/10.
The present very positive position is a complete reversal of the situation just a few years ago. As noted in the Executive Summary, in 2009 with production having dipped below 120,000 the company’s future was in severe doubt. A plant closure seemed imminent and the possibility of a partial sale to another investor was seriously considered. Moreover, back in 2010, JLR was barely profitable, reporting profits before tax of just UK£57mn – the figures for 2012/13 amounted to a rise of over around 3000%. The change in the company’s situation is testimony to the positive impact of having the right products available at a time of market growth. The launch of the Range Rover Evoque in particular has boosted the company’s position in financial and unit sales significantly; its success in China in particular has underpinned the transformation in the company’s finances.
The company’s strong performance in the FY2012/13 has continued in the first quarter of FY2013/14: global retail sales were up 10% at nearly 95,000 units, with revenues up by 135 at almost UK£4.1bn; profit before tax was up even more, by 25%, at £415mn.
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IHS Automotive | Supplying Jaguar Land Rover
With this positive picture in mind, this report describes JLR’s current model line-up and its projected production volumes (according to IHS) as a prelude to a discussion of the company’s purchasing philosophy and approach to suppliers. Included in this report is a lengthy and wide-ranging interview with one of JLR’s senior purchasing executives, David Allen. This interview explains how JLR’s purchasing strategy has changed in recent times in response to the company’s recent growth – and how it expects to change in the years ahead. Specifically, it addresses the crucial issue of increasing UK sourcing, something which JLR – and other UK-based vehicle manufacturers – want to see. The scale of the opportunity open to potential suppliers to JLR is addressed and the report also examines the logistical arrangements in place at JLR. In addition, the report looks at how JLR has performed in SupplierBusiness’ annual SuRe (Supplier Relationship) index survey.
Perhaps the most important theme to come out of this report is the scale of the growth in sourcing at JLR which will take place over the next few years, especially in the UK. The company is clearly expecting a significant increase in production alongside the re-patriation of some sourcing back to the UK. In the current financial year, JLR expects to spend in the region of UK£6bn with UK suppliers, a level which it expects will grow by more than 50% in the period to 2017.
JLR believes there is a clear opportunity for the UK supply base to create substantial numbers of new, permanent skilled jobs; indeed it regards this opportunity as the “largest skills and recruitment uplift in a generation”; it adds that it sees this as a “once in a lifetime” chance, exhorting the industry to make sure it is appropriately skilled and resourced to take advantage of this opportunity – and challenge.
Recent developments at JLR – rising profits and global expansionThe recent growth at JLR has been on the back of significant commitment to investment in new products authorised by parent company, Tata Motors. Having held its nerve during the 2009 downturn, the company has begun to see the benefits of its investment in terms of the success of the Range Rover Evoque and new Range Rover especially; these models’ global successes have given the company and its parent, Tata, the confidence to commit significant funds to further investment in a series of new models, the details of many of which have yet to be made official. In March 2013, JLR announced it will spend around UK£2.75bn in this year alone in expanding its product range and production facilities globally. Further investment of this order is expected in the years ahead.
It is worth noting that JLR’s investment plans for the next few years exceed its most recent profits by quite a margin; for the year to March 31, 2013, JLR’s profit before tax rose by 11% to UK£1.68bn on revenues which had risen by 17% to UK£15.bn. These financial results were achieved on the back of a 22% rise in unit sales to nearly 375,000 vehicles worldwide. It is clear that JLR will not only use up its profits in making its immediate investments, but it is also highly likely to have to borrow to meet its investment aims. The scale of investment which JLR is undertaking is certainly required for the company to make the move its needs to become a major global player in the premium vehicle market; with total sales in calendar year 2012 of around 357,000 vehicles, its total volume is actually less than the volumes achieved by BMW with the 3-series alone: on this basis, potential should certainly exist for JLR to grow across all the segments in which it currently supplies and also sell into new segments, i.e. those which it does not sell into.
The company’s strong performance in the FY2012/13 has continued in the first quarter of FY2013/14: global retail sales were up 10% at nearly 95,000 units, with revenues up by 135 at almost UK£4.1bn; profit before tax was up even more, by 25%, at £415mn.
Although the company’s geographic diversification will certainly see the first full JLR manufacturing facilities outside the UK (there have been CKD activities for some time in various locations, including Turkey and South Africa and more recently India), the company has emphasised that this international expansion will not lead to any diminution in the scale and importance of the UK facilities. The company’s commitment to UK manufacturing is and will remain resolute. In fact, the biggest short-term barrier to JLR’s growth in the UK could actually be a lack of capacity at its own facilities – and those of its suppliers – in the UK.
In recent times, JLR has started assembly of the Land Rover Freelander and Jaguar XF in India and has started building its new JV factory with Chery in China; this plant will be a full manufacturing facility making both Jaguar and Land Rover models and also models to be sold under a new JLR-Chery joint venture brands. The company has also signed a letter of intent with the government of Saudi Arabia regarding sourcing aluminium from the country and quite possibly building
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