Is the Land Rover in Need of a Second Save?

Majestic. Tough. Powerful. Sporty. Durable. We bet these are among many other adjectives that come to your mind at the mention of “Land Rover”. If you are one of the thousands of loyalists this car has all over the world, or if you are one of those who have been saving up for your childhood dream of owning a Land Rover, this piece of news will probably come as a not-so-pleasant surprise. The adjective “troubled” has also been associated with the beloved Land Rover for quite some time now.

While the initial tough patch for this fan-favourite car company arrived in 2008 when according to CEO Ralf Speth the company was on the verge of bankruptcy, Tata Motors acquired the company and turned things around for the better. The second rough spot seems to have hit now after more than a decade, when the company found itself severely short of revenues. In an interview to Economic Times, Speth disclosed that the company had counted on its sale in China to bail it through the tough Brexit phase. However, what went wrong for them to some extent was beyond their control. China faced a severe economic slowdown in this year. In fact, the rate of growth has come down to almost 6.6 percent. Naturally, the sales for the Land Rover also dropped drastically by almost 7.7 percent.

In our opinion, what went really wrong for the Land Rover and almost took it to the verge of bankruptcy again, was a case of simple bad timing. The UK is awaiting the impact of Brexit, and it is no secret that the production of Land Rover parts takes place mostly in the UK. According to Speth, the numbers hover around “2,500-3,000 cars a day and lots of engines out of the UK”. In a situation as volatile as the Brexit, they are uncertain about the taxes that would be levied for them to move the goods around, and whether the profits would take an even bigger hit in the future. The USA’s hesitation to buy cars and instead be more focused on leasing cars does not help the situation out, either.

In its home turf, the UK, the Land Rover has other challenges to face. The country has levied diesel taxes and the market has been flooded with electronic cars. Both these factors combined have placed this luxury sports car in a really sticky spot where the competition is not just within the segment, but also with factors altogether out of control. At this point, Speth reiterates that it is still advisable to opt for diesel cars because diesel is “better on CO2 emission than petrol, and on particulate matter and NOx (Nitrogen Oxide), it is equal to a petrol engine”. For these reasons, he is hopeful of the Land Rover making a great comeback in the near future and reclaiming its market share.

While it is just a matter of unfavourable situations all around the world, Speth is not counting on luck alone to turn the fortune of the Rover around. Heavy investments have been made in the Range Rover Sport, E Pace and I Pace. By having a diverse portfolio which boasts of awards like car of the year in Germany, the company is planning on tapping into newer crowds in newer markets to stabilise the finances. Additionally, $1.4-billion investment has been made in a new factory in Slovakia as a plan B, should the factories in UK come under the Brexit fire.

With strong leadership and a bunch of prudent decisions being taken, we feel it is only a matter of time before the Land Rover returns to run its turf.