Image source: Visual China

Blue Whale News, August 14 (Reporter Li Zhuoling) Recently, the high inventory ratio of Jaguar Land Rover has attracted attention.

According to the latest survey results of the "Automobile Dealer Inventory" for July 2024 released by the China Automobile Dealers Association, six brands had an inventory ratio exceeding 2 months in July. Among them, Jaguar Land Rover had the highest inventory depth.

Blue Whale News learned from Jaguar Land Rover dealers in various regions of Guangdong that due to the increased terminal discounts, some dealers are facing losses with each sale, and some dealers bluntly stated that "10 out of 12 models in the store are sold at a loss"; other dealers that were once titled as "the first authorized dealer in western Guangdong" have already sold their dealerships and are only retaining after-sales services.

In fact, Jaguar Land Rover is not the only one facing the dilemma of high terminal inventory and increased dealer losses. These practical difficulties are also sweeping through many domestic joint ventures and multinational automakers that still focus on selling fuel vehicles. Data shows that only 27.3% of auto dealers achieved profitability in the first half of this year, and compared to last year's profitability ratio of 37.6%, the area of losses has further expanded.

The compression of dealers' profit margins is intensifying frictions and competitions with automakers. Before that, luxury brand Porsche was exposed to protests and boycotts from some Chinese dealers who sought to "pressure" Porsche's German headquarters; later, news spread that several Beijing Hyundai dealers jointly requested a suspension of vehicle deliveries.

As an interest community, automakers and dealers share a relationship of "prosperity or decline together." Behind the intensifying competition in the automotive market, how dealers, including those of brands like Jaguar Land Rover, can solve their survival challenges and "survive," and how automakers can navigate the painful transition period are both tests.

Tens of thousands of discounts are offered right after the launch of a new model

Behind the high inventory ratio that has attracted much attention, some Jaguar Land Rover dealers reported facing the situation of "increased terminal discounts and increasing losses from car sales."

Recently, Blue Whale News consulted Jaguar Land Rover dealerships in Guangzhou, Zhuhai, and other regions in Guangdong as a consumer. Multiple sales representatives indicated that significant discounts and high cost-performance ratios are currently available, making it a good time to purchase.

Taking the 2025 MY Discovery Sport, which was just launched on July 15 this year, as an example, the starting price of the vehicle is 388,300 yuan, but currently, there are discounts of hundreds of thousands of yuan at the terminal.

"This car can currently be purchased for around 238,000 yuan, including purchase tax and insurance, but it must be purchased on credit. It will be more expensive to pay in full," said a sales representative from a Jaguar Land Rover 4S store in Guangzhou. A sales representative from a store in Zhuhai also stated that the vehicle currently has a discount of 140,000 yuan at the terminal, and the high-end version can currently be purchased for around 260,000 yuan.

Regarding such significant discounts at the terminal, will dealers incur losses?

"We've been losing money all along, but it's just that the losses have increased from around 80,000-90,000 yuan per car to 130,000-150,000 yuan per car," bluntly stated a sales representative from a Jaguar Land Rover dealer in Guangzhou. They also indicated that multiple models in their store are being sold at a loss, "Out of our 12 models, only the Range Rover and Defender are profitable, while the other 10 are all sold at a loss."

In fact, the phenomenon of dealers "carrying heavy burdens forward" is not unique to Jaguar Land Rover.

According to the latest survey results of "Automobile Dealer Inventory" released by the aforementioned China Automobile Dealers Association, the comprehensive inventory ratio of auto dealers in July was 1.50 (with 0.8-1.2 considered the reasonable range), an increase of 7.1% month-on-month, and the inventory level was at the warning line. It is estimated that the terminal sales of passenger vehicles in July were approximately 1.75 million units, and the total inventory of auto dealers at the end of July was calculated to be approximately 2.6 million units, with an increase in total channel inventory.

Currently, high-end luxury, imported, and joint venture brands are under significant inventory pressure. Data shows that the inventory ratio of high-end luxury & imported brands was 1.38, an increase of 34.0% month-on-month; the inventory ratio of joint venture brands was 1.63, an increase of 14.8% month-on-month. Among them, the three brands with the highest inventory depth in July were Jaguar Land Rover, Beijing Hyundai, and Dongfeng Nissan.

Image source: China Automobile Dealers Association

"The uncertainty in the future automotive market will increase. Dealers should rationally estimate actual market demand based on actual conditions. At the same time, they should strengthen the promotion of 'trade-in and scrapping policies,' boost consumer confidence through enhanced services, prioritize cost reduction and efficiency improvement, and guard against operational risks," advised the China Automobile Dealers Association.

Some stores have switched to selling other brands

As operating losses increase, some dealers are withdrawing from the network. According to data from the China Automobile Dealers Association, in 2023, the top 100 dealers opened a total of 555 stores, with new energy brands accounting for 60% of them, and cooperation was mainly with domestic new energy brands such as BYD; at the same time, 333 stores were closed, most of which were mainstream joint venture brands.

Taking Jaguar Land Rover as an example, Blue Whale News found that there are currently no Jaguar Land Rover dealerships in some regions of Guangdong.

According to the official website, Jaguar and Land Rover brands previously established channel networks in ten regions of Guangdong, including Guangzhou, Shenzhen, Dongguan, Huizhou, Shantou, Zhongshan, Zhuhai, etc. However, currently, dealers in Qingyuan and Zhanjiang only provide after-sales services.

It is understood that Jaguar Land Rover's dealer in Qingyuan is Qingyuan Qingfeng Aoda Automobile Sales and Service Co., Ltd. The dealer profile shows that the company covers an area of 7,000 square meters with a total investment of 30 million yuan. Designed and constructed according to the latest global standards of Jaguar Land Rover, it is currently the largest and most luxurious auto 4S store in Qingyuan. "It is a standard exhibition center integrating brand experience, model display, new car sales, after-sales service, and Jaguar Land Rover used cars. Its business scope covers the sales and service of the entire series of Jaguar Land Rover products," the profile states.

Its dealer in Zhanjiang is Zhanjiang Gangchang Automobile Service Co., Ltd. According to the profile, the company is the first dealer in western Guangdong to obtain authorizations for the two British luxury automotive brands of Jaguar and Land Rover. It is a Jaguar Land Rover 4S store integrating vehicle sales, spare parts, after-sales service, and information feedback.

However, currently, both of the aforementioned dealers indicate that they "only provide after-sales services." Blue Whale News called the after-sales hotlines of both dealers, one of which was unanswered, while a sales representative from the other dealer stated that they no longer sell Jaguar Land Rover vehicles and only provide after-sales services, "We've switched to selling other brands now."

Regarding the high inventory ratio, Blue Whale News also interviewed Jaguar Land Rover regarding whether the manufacturer would introduce any support measures for dealers in the future, but no response had been received by the time of publication.

Models with near-zero profitability are being phased out

In fact, from the automaker's perspective, accelerating transformation, enhancing the comprehensive competitiveness of its models, and assisting dealers in resolving profitability dilemmas have become urgent issues.

Previously, Jaguar Land Rover was also exposed to be "cutting off an arm to save its life." Global Times Technology reported on July 15 this year that Adrian Mardell, the Global CEO of Jaguar Land Rover, revealed in a public interview that to optimize the brand structure and enhance overall profitability, the Jaguar brand is planning to significantly reduce and phase out some existing models.

It is understood that the models included in the phase-out list include the Jaguar XE, XF, F-TYPE, E-PACE, and I-PACE, primarily due to their "profitability approaching zero."

For reference, according to the official website of Jaguar China, its current full line of models includes the Jaguar F-PACE, E-PACE, XEL, XFL, F-TYPE, etc. If the aforementioned statements are implemented, combined with the aforementioned list, multiple Jaguar models in China may be phased out.

It is worth noting that in early 2021, Jaguar Land Rover already announced that from 2025 onward, all "Jaguar" vehicles produced by the company will be electric. However, as this timeline approaches, the majority of Jaguar's currently available models are still primarily fueled vehicles.

To accelerate its transformation, Jaguar Land Rover intends to leverage the Chery platform to build electric models.

In June this year, it announced the signing of a strategic cooperation letter of intent with Chery Automobile, authorizing Chery Jaguar Land Rover to use the "Freelander" brand on its newly launched electric vehicles.

Public information shows that Chery Jaguar Land Rover Automobile Co., Ltd. was established in November 2012 as a joint venture between Chery Automobile Co., Ltd. and Jaguar Land Rover Automotive plc, with a 50:50 shareholding ratio between the two partners.

Specifically, Chery Jaguar Land Rover's new product line will adopt the revived "Freelander" brand and Chery's pure electric platform, produced at Chery Jaguar Land Rover's Changshu factory. The "Freelander" electric product line will be produced in parallel with Chery Jaguar Land Rover's existing product line.

Regarding the current progress of the Freelander electric brand and whether independent sales channels will be adopted in the future, Jaguar Land Rover told Blue Whale News that other information would have to wait for the time being, beyond what has already been disclosed.