Jaguar Land Rover to Cut Production on Brexit Fears

September 30, 2019, 2:58 PM UTC

Luxury vehicle maker Jaguar Land Rover has announced it will cut its production by 7,000 vehicles a year amid Brexit fears.

The cuts come as global demand for new vehicles tapers after a heady post-recession market. In the U.S., the appetite for trucks and SUVs has managed to hold steady, while sales of sedans and smaller cars tumble.

That’s why luxury automakers are beefing up their SUVs with more power and features, hoping that consumers will continue to pay premium prices as the car market cools. U.K.-based Jaguar Land Rover is counting on sales of its larger vehicles, including its new entry-level Discovery Sport, to carry it through the slump.

“We’ve definitely left the ‘unrestrained growth’ mindset we were in for the last several years,” said Karl Brauer, executive publisher for Kelley Blue Book. Brauer cited a drop in auction sales at last month’s Monterey Car Week and turbulence in the financial markets due to global trade tensions.

“That makes everyone, including luxury car shoppers, nervous,” Brauer said. “That will likely curtail what has been a vibrant luxury market since the Great Recession ended around 2013.”

Stagnation also spells fierce competition within the luxury market’s highest-volume segment: compact crossovers such as the Discovery Sport, Mercedes-Benz GLC Class, BMW X3, and Audi Q5. The GLC, the brand’s best-selling model in the U.S., debuted last month with an enhanced powertrain and the new Mercedes-Benz User Experience interface with natural speech recognition.

Jaguar Land Rover, which is already facing a steep global sales slowdown and a credit downgrade, is eager to catch up. The U.S. market has been a bright spot for the British brand, which sold 92,000 units stateside last year, a significant surge from 26,000 units in 2009.

To remain competitive, Land Rover is updating its most affordable model.Starting at $37,800, the 2020 Discovery Sport gains an optional, 48-volt, 286-horsepower mild hybrid powertrain, as well as wireless device charging, a 4G built-in Wi-Fi hotspot, and Apple CarPlay and Android Auto smartphone integration. Land Rover’s latest infotainment system with a 10-inch touch screen comes standard.

The upgrades will help keep Land Rover’s entry-level model attractive in an increasingly crowded market, according to Ed Kim, vice president of industry analysis for AutoPacific. Built on the same underpinnings as its higher-end Range Rover Evoque counterpart, the Discovery Sport features an optional third row to seat seven passengers and a standard 246-horsepower, four-cylinder gasoline engine.

“I think the main problem with the Discovery Sport is that it hasn’t really had anything to distinguish itself in such a competitive segment,” Kim said. “For a Land Rover, it looked surprisingly milquetoast, and nothing about the way it looked suggested its good off-road capability.”

The Discovery Sport only sold about 7,700 units in the U.S. for the first eight months of the year, compared with 45,800 units for the Mercedes-Benz GLC-Class during the same time.

The Discovery Sport comes equipped with systems for handling rocks, sand, mud, and nearly two feet of water. The optional ClearSight Ground View camera system helps the driver see the terrain beneath the hood, providing a 180-degree view on the central touch screen, which is useful for navigating tight parking spots and well as narrow paths off-road. The optional ClearSight Rear View system displays a rear-facing camera feed on the rearview mirror to help the driver see passengers or objects behind the car. The new system positions the camera above the rear window to provide a wider view and clearer visibility in low light.

Meanwhile, Land Rover is readying for the re-launch of its long-anticipated Defender off-roader early next year. The boxy SUV will help round out the lineup, alongside the Land Rover Discovery and Discovery Sport nameplates. “We have SUVs that are appealing to every consumer out there,” said Joe Stauble, a Land Rover spokesman.

Consumer reluctance could impede luxury vehicle sales, Brauer said. “All those features and technologies add up quickly on the window sticker, and the appetite for no-holds barred luxury, at any price, may be fading.”