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Paris Motor Show 2012: New Range Rover Details Released Ahead of Paris Debut, Key to Greater Profitability for JLR

Published: 8/16/2012
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JLR has managed to generate a huge weight saving for the new Range Rover through the use of aluminium monocoque construction while new model should boost sales by almost 30% in 2013.



IHS Global Insight Perspective

 

Significance

Jaguar Land Rover has shown images and revealed technical details of next generation of its flagship Range Rover model which makes extensive use of aluminium to generate a weight saving of 420 kg in comparison to the existing model.

Implications

The company will hope that the new Range Rover will help generate a significant uplift in profitability, an area in which JLR has lagged in recent times. For example in the second quarter, despite a 31% rise in revenue, largely thanks to the Evoque, net profit only rose by 9%.

Outlook

The impressive weight savings generated by the all-new monocoque platform will allow the addition of more equipment and move the Range Rover even further upmarket with the company expanding the upper range offerings of the model. This will increase the range's overall margins and allow greater customer individualisation.

Jaguar Land Rover (JLR) will launch the latest iteration of its iconic Range Rover at the Paris Motor Show, which ensures the model meets regulatory and industry standards in emissions and fuel economy while also helping the model move further upmarket. This move towards offering a greater number of high-end equipment and trim options will also go a long way to improving the overall sales mix of JLR as a group and boost the company's profitability which has significantly underperformed in comparison to sales growth in recent months. The Range Rover is a genuine luxury icon within the automotive industry. In some respects it was the original segment-buster, being the first model to combine the notions of luxury and extreme off–road capability on its initial launch in 1970. Indeed the Range Rover is the antecedent to all the current premium sport utility vehicles (SUVs), which has become the fastest growing and highest margin segment in the global industry.

Because of the Range Rover's status and the fact that it is the profit generating flagship for Land Rover, it is vital that JLR gets things right in terms of product design and vehicle engineering. The key technological element to the new model has been the introduction of a new all-aluminum monocoque bodyshell is the first for an SUV, according to the automaker. The bodyshell is 39% lighter than the steel structure used before and helps deliver "significant" improvements in performance and agility, as well as fuel economy and CO2 emissions, Land Rover said in a statement. However, the company has yet to announce any official data on these numbers or indeed the powertrain options that will be available at launch.

The key takeaway from the new aluminum monocoque is that the new structure and platform will see Range Rover save up to 420 kg on the current model's kerb weight depending on the variant in question. This aluminum monocoque construction technique has been refined by Land Rover's sister brand Jaguar in the manufacture of the XK and XJ models, and all future high-end JLR models are likely to be constructed in this way. The lighter construction will improve overall efficiency but will also give the company scope to also add more equipment and features without penalising economy and emissions in order to move the model even further upmarket. Global brand director John Edwards says that while it preserves the Range Rover's "essential, unique character", the new car's clean-sheet design and lightweight construction will "transform the experience for luxury vehicle customers, with a step change in comfort, refinement and handling". In addition to higher levels of cabin equipment and trim and finish the new model also features the latest generation of electronic ride and stability control equipment, and there's a new, more responsive Terrain Response 2 Auto system that reads on-road and off-road conditions and configures the car accordingly. In terms of its styling the fourth-generation model, which will appear in showrooms in the early weeks of 2013, is a modern update and evolution of the classic shape. It has an extensively redesigned front and rear end, with new LED light clusters, but the overall form is distinctive and recognisable as a Range Rover. Wheelbase has increased by around 100 mm and the front and rear tracks have increased by a similar amount, which will further improve handling and stability. Pricing has yet to be announced but will be in the region of GBP70,000 (USD109,745) to GBP120,000 in the UK. The company is extending the higher end of the model range and is hoping to sell more, high equipment content, high-end variants of the model.

Outlook and Implications

On first view the fourth-generation Range Rover appears to be a winning combination of cutting-edge, lightweight vehicle engineering and high-end luxury and design. The new model will see an significant upsurge in sales for the range and will also generate a corresponding improvement in overall margins for the company, especially with JLR likely to introduce a whole raft of high-end equipment options and interior trim packages that will help move the Range Rover, which is already a premium automotive brand icon, even further upmarket. The growth in the market for this vehicle type in emerging markets such as China and Russia further justifies this strategy of offering enhanced vehicle personalisation and high-value interior trim and equipment packages, with customers in these markets spending higher than average amounts on optional extras. As a result the launch of the new Range Rover in 2013 should prove a major boost to JLR's overall sales and profitability, the latter of which has been less than stellar in recent times. In the first quarter of the JLR's financial year, the company's net profit rose by 9.1% to GBP235.9 million, although this figure lagged somewhat the impressive rise in sales during the period, of 34.8% y/y to GBP3.6 billion, off the back of strong sales in China and of the Evoque model (see India: 10 August 2012: Tata Posts 12.3% Y/Y Increase in Q1 FY 2012/13 Net Profit, Lifted by JLR's Chinese Sales), although currency effects are also likely to have played a part in this discrepancy. However, the launch of the new Range Rover should help close the gap between revenue and net profit increase next year. IHS Automotive forecasts that Range Rover sales will rise from 28,000 to 36,000 units with the launch of the new model next year, which should see a corresponding uplift in JLR's financial performance.

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