Jaguar Land Rover: Managing Two Automotive Brands

Could you run through how the different owners have managed the two brands?

I'll go back a step further to BMW. They really couldn't get to grips with the company and how to make money. We were making quite good money in the late 90s. But in the mid to late 90s, they did some very Germanic things and they over invested in products that didn't make them seem new enough. So, it was particularly the Discovery that was making them good money. And then they brought in the Discovery Series 2, and the piece costs went up 25%. It was a much, much better car, but it pretty much looked exactly the same as the old one. We couldn't really charge any more money for it.

So we were losing horrible amounts of money in the late 90s, and they absolutely could not figure out how to get to a profitable business plan. With Rover cars circling the drain and with Land Rover starting to be loss-making, in the last days of BMW, we were cranking through multiple different cycle plans and just couldn't make it work. We were looking at premium, we were looking at niche, we were looking at high volume, we were looking at US or not US. We couldn't make it work any which way round. It was interesting because what we were trying to do at Land Rover was something akin to a Toyota Land Cruiser - a 7-seat vehicle - and something akin to a Jeep Grand Cherokee - a 5-seat vehicle - but we just could not make it work.

Ford came in to Land Rover and looked at the cycle plan. The cupboard was bare, so we had to take some pretty difficult short-term actions to keep the business going for a few years until we got a new product. There was a key lightbulb moment with Ford at the helm: the Ford management style was to bring in some of their global talent and place them into the company. They didn't manage us from a distance, they brought in a significant number of their global talent in and put them into senior roles in the organisation. So we were kind of autonomous, but with a Ford type of feeling to it.

With this new approach and with a fresh sheet of paper, the idea was born: “Well, the same way that a BMW 3 Series coupe is more expensive than a 3-Series saloon, what if we charge more money for the 5-seat, 5-door car than for the big 7-seat car?” Actually, if you change that price position significantly, a business equation starts to work.

Additionally, we decided to make it a Range Rover rather than a Land Rover. It became the Range Rover Sport. Then we got the volume mix the wrong way around between the two products, and the Range Rover Sport sold like hotcakes. What was a basketcase in 2000 became a raving success in the mid-2000s. It was really quite an interesting turnaround for the brand and the business.

In the meantime, there was the big Range Rover - the cash cow that the business had launched in 2000/2001 and that was essentially engineered by BMW. They spent an absolute fortune on it. But they needed to get rid of Land Rover to get rid of Rover, and Ford benefited from a largely BMW-engineered car in the early 2000s. Hence a very strong portfolio going forward. Of course, that was great guns until the financial crash in 2007/ 2008 and everything changed, which I think is what really drove Ford to make the change and make the sale to Tata.

So Ford actually rolled out the Range Rover from the existing BMW architecture then?