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Domestic Land Rover: the Case for a Low-Power Version

Date:06-14 08:03 Source:autochina.comnews.cn Authour:Wu Yue

Currently, Chery Jaguar Land Rover has a production capacity of 130,000 vehicles, of which 30,000 are reserved for domestic Jaguar XFL. (Class C vehicle. Imported Jaguar XF is sold at RMB 518,000 to 808,000 yuan.) In 2015, Chery Jaguar Land Rover announced an additional investment of RMB 6.67 billion yuan to expand production capacity by 70,000, of which 40,000 will be reserved for Jaguar. (Jaguar plans to localize the long-wheel base version of the XE, a Class B model.) By 2018, the total production capacity will reach 200,000. The viability of this ambitious plan is largely dependent on explosive growth in the sales of the domestic Evoque and Discovery Sport. Thus, the introduction of low-power versions is now an imperative.

Domestic Land Rover: the Case for a Low-Power Version

The introduction of low-power versions is now an imperative.

Unveiled at this year’s Auto China, the locally-produced Land Rover Evoque 2016 (hereinafter referred to as “domestic Evoque”) officially went on sale on June 1st at a starting price of RMB 398,000 yuan, unchanged from that of the 2015 model. But the configuration has been improved: in addition to the standard configuration for the brand - such as adaptive LED headlamps, panoramic sunroof, lane-holding aid, and automatic emergency braking - high-end and middle range models are all equipped with heated steering wheel and rear seats, induction tailgate, and parallel/perpendicular intelligent parking assist function. Suffice to say, the price and configuration of the domestic Evoque meet the product positioning of Land Rover that “Evoque is better than Discovery Sport.” (The domestic Discovery Sport hit the market last November.) But the key is whether it can compete with its rivals from other brands.

The Domestic Evoque came onto the market at the beginning of last year. After one year of adjustment and adaptation, it has gained a foothold in the luxury compact SUV market. From January to April this year, Jaguar Land Rover sales in China totaled 37,000, a year-on-year increase of 16.6%. In April, the domestic Evoque and the domestic Discovery Sport, which hit the market last November, together achieved the sales of 4,964, surpassing the sales of imported counterparts, which stood at 4,171. Such results are quite remarkable for a recently localized luxury car brand.

The improvement in the sales of the domestic Evoque is largely due to the gradual recognition of its value by consumers, after a RMB 50,000 yuan reduction in starting price last July and heavy discounting at terminals. (All brands are following the same route. Few dealers sell cars at the guide price set by auto makers.) However, every silver lining has a cloud. As a midsize luxury SUV, Evoque is mostly targeted at young, fashionable consumers. The auto maker views Audi Q5 and Mercedes GLC as its main competitors. From January to April, Q5 sales reached 44,300, nearly 9 times that of the domestic Evoque and Discovery Sport; GLC sales reached 23,100, almost 5 times that of the two models. So, what is going wrong?

After the overall price reduction, the starting price of the domestic Evoque is still higher than the Q5 and the GLC. Is this the right pricing strategy? As shown in the attached chart, the displacement of the domestic Evoque and the Discovery Sport is 2.0T, the same as the entry-level models of the Q5 and GLC. However, the power index of the two domestic models is way above that of the competition. Considering the price for products with similar power, the domestic Evoque and Discovery Sport are far from overpriced. Indeed, their prices are quite competitive. Nevertheless, because only the high power versions are available, it’s impossible to bring down the prices of the domestic Evoque and Discovery Sport. If Land Rover were to introduce 135kW entry-level models for the vehicles, the starting price would fall drastically, which would undoubtedly boost sales. Therefore, Chery Jaguar Land Rover must address the issue of an engine for lower-power versions.

It’s very clear that the domestic Evoque has a much shorter wheel base than competing products. However, pricing is determined for both ordinary and luxury brands by power level rather than wheel base. Besides, Land Rover emphasizes off-road performance. A short wheel base makes it easier to drive on mountainous roads, especially when climbing inclines.

Currently, Chery Jaguar Land Rover has a production capacity of 130,000 vehicles, of which 30,000 are reserved for domestic Jaguar XFL. (Class C vehicle. Imported Jaguar XF is sold at RMB 518,000 to 808,000 yuan.) In 2015, Chery Jaguar Land Rover announced an additional investment of RMB 6.67 billion yuan to expand production capacity by 70,000, of which 40,000 will be reserved for Jaguar. (Jaguar plans to localize the long-wheel base version of the XE, a Class B model.) By 2018, the total production capacity will reach 200,000. The viability of this ambitious plan is largely dependent on explosive growth in the sales of the domestic Evoque and Discovery Sport. Thus, the introduction of low-power versions is now an imperative.

A major selling point of the domestic Evoque is its unique avant-garde design. The pioneering design of a floating roof and the coupé-like appearance are attractive to a large number of young female customers, and they are being imitated by many auto makers. Many girls long to have the car as their “dowry”. In contrast, the Q5 and the GLC have a much broader customer demographic. The swift localization of the Discovery Sport indicates that the auto maker wants to complement the domestic Evoque with the practical product positioning of the Discovery Sport.

The product characteristics of the domestic Evoque determine that it has a lot of room for improvement. In the current product line-up, the high power version is the only option. This limited choice and the resulting ‘over-performance’ have pushed up the cost. As one of the top off-road brands, Land Rover, in the pursuit of extreme performance, has developed a much more complex chassis than the passenger-car chassis used on many urban SUVs. The Domestic Evoque features the strongest off-road capability amongst vehicles of the same class, which is evidenced by the PTO transfer (it takes only 300 milliseconds to switch from two to four wheel drive), by the APTC off-road mode cruise control (1.8-30 kilometers per hour), and by the 45 degree slope-climbing and 500mm wading depth. The question is how much the target customers for the domestic Evoque really need these functions? The same applies to the Discovery Sport. Of course, the answer depends on how much weight the auto maker gives to performance, configuration, and cost.

Officials of Chery Jaguar Land Rover did not give a direct answer to whether they will release a low power version for the domestic Evoque and Discovery Sport. They simply revealed two things: first, Jaguar Land Rover has been developing lightweight bodies; second, low-emissions and high-power is the general trend of engine design. Perhaps we can make a guess about the future product strategy of the domestic Evoque and Discovery Sport based on this reply.


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