February 2019
Interaction with large JLR dealers in China
By Nitesh Sharma
GV’s interaction with top dealers of JLR in China indicated that the country’s issues would continue to haunt TAMO for some more time. While the company is making efforts, results would take time to materialise.
- Dealers were optimistic about luxury vehicle sales in China for 2019; expect c.5% growth for the industry.
- Key trigger for fall in automotive sales was bankruptcy of over 3,000 P2P lenders (of a total 5,000). Revival of the automotive sector is a key focus for the Chinese government.
- A large JLR dealer highlighted that JLR contributed only c.7% of his revenues in 2018, down from 17% in 2017.
- Many JLR dealers stopped accepting inventory from September 2018; even then, dealer inventory is high at nearly 70-80 days.
- Average discounts for JLR products remain elevated at 20-25%, much higher than competition with Porsche at 5-7%, Mercedes 8-10%, BMW/Audi c.13%.
- Dealers are incurring losses on JLR products, hence motivation is currently low.
- Dealers expect JLR to announce its first black-box incentive to help recover past losses.
- JLR has given charge of CJLR integrated marketing sales and services to Mr Qing Pan – which has been taken positively by dealers. They expect faster decision making ahead.
