By Neil Halligan
Jaguar Land Rover has had mixed fortunes in the Middle East, but new regional boss Bruce Robertson says the Tata Motors-owned manufacturer is investing heavily in new products and new dealerships
With two models launching in 2015, the head of Jaguar Land Rover in the MENA region is certainly looking forward to another bullish year.
For a fifth consecutive year, the car manufacturer recorded global sales growth, up 9 percent on the previous year, with 462,678 vehicles sold in 2014.
In the MENA region, sales were up 6 percent, driven by strong demand for the Range Rover Sport, the brand’s top selling model in the region.
The region’s new managing director, Bruce Robertson, arrived in the Middle East in April last year, having enjoyed a hugely successful four-year stint in China, where he oversaw the company’s growth in the country from 34 dealers selling 20,000 vehicles per year, to 220 dealers by 2014, which were selling 103,000 vehicles.
Having come from the fast-growing Chinese market, which he describes as “untapped and unlimited,” Robertson says he sees room for growth in the MENA region, but not on a scale he saw in the Far East.
“I don’t think the market will necessarily hold that here, unless we’re in a position where we have a much cheaper product. The brand still needs to grow here. People are very strong on Range Rover, but Land Rover is a brand that still needs to grow. It’s a brand in the UK, the US, South Africa that people recognise and know, but in the Middle East they know Range Rover. But we want to grow the Land Rover side of the business,” Robertson says.
It’s somewhat surprising, given the Middle East’s strong, historic association with the Land Rover brand. In the 1960s, Land Rover was reported to have as much as 90 percent of the 4x4 market in the region.
The Sheikh Zayed Palace Museum in Al Ain proudly displays the Land Rover Series that the UAE’s founding father used to drive. It’s a vehicle that a generation in the Middle East has grown up with.
“Many of the sheikhs were only able to see their lands in the early 40s and 50s through them driving our vehicles,” Robertson says.
“When the Range Rover came in 1970, it really allowed them the opportunity to commute in style but at the same time with functionality,” he adds.
The Ruler of Dubai, HH Sheikh Mohammed Bin Rashid Al Maktoum, famously took delivery of the world’s first all-aluminium Range Rover in 2012, so the brand’s strong association with the region continues, but it still lags behind cheaper competitors.
Robertson says the company has seen noticeable improvements in the region, with new vehicles helping to boost sales.
“Over the past couple of years, we’ve seen some product rejuvenation. We have brought a lot of new products to market on both brands, and it has really paid off. We’ve seen significant growth in the region, both in the Middle East and North Africa,” he says.
The company has also made a number of changes in dealerships, with significant expansion planned over the next four years.
“We’ve changed a few of our importers in a few markets over the last couple of years and I think that’s helped. We’ve moved away from partners who weren’t necessarily investing and performing at the right level,” he says.
“We’ve opened up the number of dealerships in the market. We’ve grown now to 40 and going forward, by 2018/19, we’ll get to over 60. With that, it creates tremendous opportunity from a volume point of view, but more importantly the opportunity for employment. Each dealership employs roughly between 100 to 120. Another 20 dealerships, the minimum impact you’ve got is 2,500 people employed, plus all of the services that come out of that.”
In China, Robertson says Land Rover operates on a franchise model, but in the MENA region the company operates on an importer-based model.
“The level of investment that has gone in is good. You’re not talking small facilities here — the average investment is $5m to $10m,” he says.
The two key launches this year involve vehicles from either side of the business — the Jaguar XE and the Land Rover Discovery Sport — and Robertson is excited about how they will be received.
“We’ve got the new Discovery Sport, which is a new car for us. We’ve got the new Jaguar XE, which allows us to get into a sector of the market where we haven’t been competitive and then we have the [updated] Range Rover Sport.
“The importers wouldn’t be investing significant sums of money, in terms of new facilities, in the UAE and Qatar, unless they believed in the brand and the future. These guys are sharp operators. They know the markets and they know what’s going on,” he says.
Land Rover Discovery is a model that was launched to succeed the Defender (the long-running successor to the Land Rover Series), which the company announced would cease production in December of this year. Robertson believes the new, 450-kilo-lighter Discovery Sport will be a successful one.
The Jaguar brand, like Land Rover, needs more of a push this year, according to Robertson. Accounting for somewhere between 15 and 17 percent of the company’s total numbers, he says the Jaguar XE will have strong competition from established brands like BMW and Audi.
Robertson admits they have some work to do in order to change the perceived image of the brand.
“Jaguar the brand is still relatively unknown in these parts. And with many of our customers, it wasn’t a consideration before because they had seen the car as an ‘old man’s vehicle’, a ‘pipe and slippers’ type brand. I think in the last five years we’ve undergone some rejuvenation and some redesign of the brand, which make them far more appealing, with more refined motoring than before,” he says.
Robertson points towards the Jaguar F Type; while not a supercar, he believes it’s “a serious contender amongst the Porsches”.
“You look at the XJ, refined luxury and performance, the XF, a slightly older vehicle, is still competitive, the XE, a totally new segment [for us].
“You start to offer the customer a broader product portfolio, let it resonate with them, and price it in the right place and you provide them with a level of service through the dealer network that will hopefully allow them to stay with the brand.
“Awareness of the brand has been increasing in the last two to three years, which comes from an investment in marketing and product PR and investing in the brand. It’s not earth-shattering, but you need to appeal to your customers and understand their needs,” he says.
Robertson says he also needs to control the supply-demand factor. He admits he could sell more cars if more cars were delivered, but that it comes down to finding the right balance.
“On some of our products, we’ve got six-month waiting lists, which is good and bad. It’s good in that it creates demand — people aspire to it — and when that car arrives it’s a special experience but it can drive to people to look at another product.
“It’s how we engage those people and get the car faster, so that we’re able to satisfy the demand,” he says.
“And then you get into this balance of what is supply and demand and in my opinion, one car oversupplied can potentially destroy the market dynamics. It destroys customers’ perceptions, because their residual values aren’t as strong as they should be, the dealers aren’t as profitable, and so the brand does take a bit of a pounding. So it’s about getting that balance right,” he adds.
In recent years, Robertson says they’ve managed to get the balance just right.
And while there are some customers who will order the vehicles to spec from the catalogue, the demand for bespoke models has led the company to develop a department in the UK called ‘Special Vehicle Operations’.
“It’s a completely bespoke facility that has been built in the UK. It’s where we are effectively looking at performance enhancements and orientation, like the new SVR Land Rover, and the F-Type that we did with the E-type looking vehicles, but with F-Type chassis and body,” he says.
The difference, and what really appeals to customers, is that each modified vehicle comes with the same guarantees as a vehicle rolling off the factory line.
“We’ve started to orientate towards the likes of the [BMW] M, the [Mercedes] AMG, and that will appeal to the customer here. The vehicles are factory resourced, and factory warranted and factory built, as opposed to after-market function. That’s a commitment we as a company make to the customers. That is where Jaguar will be able to perform in this market in the future, with performance vehicles that come out of that particular facility,” he says.
A large proportion of the vehicles from that department will come to the Middle East, Robertson says, as customers seek assurances around modified vehicles. And again, the company will limit sales so as to maintain a certain amount of exclusivity around its products.
“We look at our SVR Land Rover Sport that we’re bringing out — we will not bring more than about 600 to 700 into the region. People want exclusivity, and they want to customise their car,” he says.
Gold steering wheels, pink roofs and blue seats are among the strange requests for vehicle customisations, but not the most bizarre, according to Robertson.
“We’ve had a request for a six-door Range Rover. We’ve had a request for a diamond-encrusted steering wheels and paint colours that change — there’s an ability to give the perception that a paint colour is changing through an aluminium fleckle that you potentially add into paint,” he says.
“I’ve seen people spend over £250,000 [$381,000] on enhancements on a car that cost £100,000 because it’s a function of their status and what they want. There is a real myriad of what can be done,” he says.
“You have to be careful, though, because it can affect the handling dynamics of the vehicle. You think, from an armouring point of view, it adds 300 to 700 kilos, depending on the level. The impact on the handling dynamics is huge, and the impact when it hits something.”
The ‘Special Vehicle Operations’ is one of a number of investments that parent company Tata Motors has made in developing the brand.
“Having gone through four owners in 15 or 19 years, the current ownership has been very, very adamant that we develop products that create a sustainable business for us in the future. We’re a standalone company now, as opposed to being a part of a Ford or a BMW, where you were actually the brand on the side. We are a key and integral part of the success of Tata,” he says.
“This year we’re investing £3.5bn in product investment. That is significantly above the 11 percent of turnover that other manufacturers will invest. We have looked at this market, and identified that we need to provide cars that will allow us to compete against the Nissan Patrols, Toyota Land Cruisers and we do,” Robertson says.
The new engine plant in the UK saw an investment of $900m that will improve the performance of vehicles produced this year. And in Dubai, Jaguar Land Rover has invested $1.5m in a new engineering testing centre in DuBiotech — one of five R&D centres around the world.
“The one in the Middle East is specifically designed for certain aspects of testing — extreme heat, sand driving and humidity. We won’t launch a vehicle globally unless there is a sign-off from the Middle East engineering centre. There’s testing that we can do here that they can’t do in other parts around the world,” Robertson says.
On a weekly basis, vehicles are put through 17,000km a week on-road driving and about 2,500km off road driving [sand], in extreme conditions.
“All the new products come out here. You’ll see the cars camouflaged every now and again. We have in the region of 30 to 40 engineers who are continually in market visiting, working with the engineering team here on different aspects of performance,” he says.
The expansion will continue this year, with up to seven of the 64 new dealerships due to open this year in the region. He says there are hopes to re-enter the Iranian market if the sanctions are lifted.
“It was traditionally a powerhouse in the region and they still have a relatively good internal industry. I think everyone’s waiting to see what happens with the talks between US, Europe and the Iranians,” Robertson says.
Every bit helps in a competitive market, where he admits competing manufacturers from Japan are doing better by making vehicles for significantly less than Jaguar Land Rover.
“They don’t have the level of luxury, but the functionality and performance of the car is good. What we need to do is ensure that we provide that level of functionality and performance, but in the manner that they would like it provided and at reasonable a fair price. There needs to be luxury with versatility,” he says.
What those manufacturers don’t appear to have, however, is the ability to market the vehicle at a level the brands like Jaguar Land Rover can. Robertson admits that Dubai Police might be lining up one or two of Jaguar Land Rover’s vehicles amongst the many luxury vehicles it has in its fleet.
And then just last week, it was announced that the latest James Bond movie, Spectre, will feature three of the group’s vehicles when it’s released in November this year — Range Rover Sport SVR, a Jaguar C-X75, and a Land Rover Defender Big Foot.
It’s that kind of exposure that can elevate the Jaguar Land Rover brand up to where its owners and management aspire.For all the latest transport news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.