Jaguar Land Rover sees ‘underrepresented’ Asia Pacific as final frontier

 Jaguar Land Rover Asia Pacific Managing Director Robin Colgan (left) and SML Frontier Automotive Managing Director Sheran Fernando 

By Madushka Balasuriya

Jaguar Land Rover has for years exemplified the best of British design, innovation and engineering, and in the process it has become a byword for excellence and luxury in some of the major markets the world over, with one notable exception. 

The Asia Pacific region has long been the cornerstone of manufacturers offering fuel-efficient and affordably priced cars to a customer base largely unwilling to spend large sums on luxury SUVs and sports cars. However, the last decade has seen a shift in priorities for car manufacturers as the region began to be seen increasingly for its growth potential, burgeoning middle class and rapidly growing populations. 

Spearheading JLR’s effort at increasing its market penetration in the region is Asia Pacific Managing Director Robin Colgan, who took up his new role in October of this year. Colgan, who has over 19 years’ experience working with Jaguar and Land Rover internationally in markets like the UK, Mexico, New Zealand, Middle East, North Africa, Pakistan and France, believes Sri Lanka is an ideal market for the type of products JLR is looking to launch in the very near future.

Among these were the new Range Rover Sport and Jaguar F-Type sports car, which were launched in Colombo last month, as well Jaguar’s first luxury SUV, the F-Pace, which will hit the Sri Lankan market later this year.

Sitting down with Daily FT, Colgan and Sheran Fernando, Managing Director of SML Frontier Automotive, the sole distributor of JLR products, spoke candidly on the potential that the post-war Sri Lankan market holds for JLR, the impact of parallel imports on the market, JLR’s aims to drive leadership in sustainable business practices and how manufacturers are adapting to the evolving environmental conscience of consumers. Following are excerpts:

Q: Robin, you have been involved in your new role since October, what have you identified as some key goals and objectives during your tenure?

Robin Colgan: We’re based in Singapore, and my region is 13 markets across the Asia-Pacific. I would say in many ways it’s almost the final frontier for Jaguar Land Rover. Our business is quite well established and it’s quite mature or it’s certainly maturing in the major markets: Europe, US, UK, and even China as we’ve now established a major presence there. I think Asia-Pacific is probably a major region of the world where up until now we’ve been underrepresented, and given our growth objectives as a company we made a decision to start putting more resources into markets like Sri Lanka and certainly across the Asia Pacific region. The main reason for that is that there is a huge population across the region. 

The economic forecasts rarely agree about many things but they all agree about this part of the world which they believe is going to see very significant growth in the coming years. A rapidly growing middle class, and a demographic picture which is very positive in terms of sustaining economic growth and our growth. So we want to put more resources in place, it’s that simple. 

My objective is to make sure that customers in my region have exactly the same level of service, same level of facility, trained staff and parts availability as a customer would have in the US or UK. I don’t think that there is any reason why standards shouldn’t be 100% consistent globally, and working with our partners here in Sri Lanka that’s what we’re going to deliver. 

Q: What expectations are there for the Sri Lankan market going forward?

Sheran Fernando: I think the post-war Sri Lankan market is now beginning to mature and I think we have to look at the Sri Lankan market not in a year-on-year but in a five-year perspective. And within that five-year perspective we will be a mature market, we will be looking at lower and more predictable duty scenarios, we’ll be looking at a tripling of our highway miles, we’ll be looking at a much bigger middle class. 

So in a sense, for a lot of us in the motor industry, we will be reaching the light at the end of the tunnel that kept us in this industry for 15 years of war and selling 15-20 cars in the year. We’re reaching a place where we can see that light.

Q: Robin, how do you see SL as a growth market for JLR?

RC: As I said earlier, success for me would be in terms of achieving all of our international standards here. I think if you look at our showroom now you can see in that aspect we’ve been able to do that. In the last year we have gone live with the new factory in the UK building ‘ingenium’ engines which are four-cylinder engines, two litres with the potential for smaller engines in the future. One of the things that interests me about Sri Lanka just now is, that I look at the products that we’re launching and I think about how appropriate they are for a market like Sri Lanka; smaller capacity engines, SUV’s, crossover’s. I feel this is a country where we can do significant business.

Q: SML are the only official dealer of JLR products in the country, but there is a fairly vast grey market of parallel imports in SL as well. Sheran, what are your thoughts on that?

SF: I think at a very basic level the fact that the parallel importer is bringing in your brand is an assertion that you’ve done your job right. This guy is confident that he can bring your brand and sell it. Now the challenge is that some of these vehicles that come through a parallel import channel have different configurations and aren’t built for this market, and in the event we have technical challenges from that it has an impact on the customer. And once a person is driving our brand we need to please our customer, we need to look after him as best we can. Parallel imports are a retail channel that is there, and it’s been in this country for various reasons. But my issue with parallel imports is with the technical aspects of the vehicles they bring in, and their compatibility with the market.

Q: That touches upon what Robin was talking about, which is about bringing the global standard of service to Sri Lanka. How does a grey market import affect that scenario?

SF: We will offer them [customers who purchased via a parallel importer] a full-on service, we will take care of them as best we can but there are impediments. For example the refrigerant in the air conditioning of certain market vehicles is not available in Sri Lanka, so if there is a need to refill the a/c refrigerant then there is an issue. The owner doesn’t know this when he buys the car, but now he’s bought this expensive car and it’s got an a/c problem and it’s just a simple problem of needing a gas top up but we don’t have the gas. Gas cannot be air-freighted because it’s a dangerous substance, it has to be sea-freighted; there are import licences. So technical incompatibilities do raise issues that the customer doesn’t know about at the inception. 

Q: Do you think that there is enough awareness being created with regard to these issues?

SF: No, probably not. I mean, we try through the motor traders association and things like that, we do try and get that awareness message out but then it’s how the message is perceived. I think the short answer to your question is we need to be more vocal in getting this message out.

Q: Moving on to JLR on a global scale. What innovations are in the pipeline?

RC: We’re heavily invested already in electrification, so a lot of our R&D budget is going towards electrification and it takes different forms. We already have hybrids in the marketplace but we’re looking at the potential for Plug-in Hybrid Electric Vehicles (PHEV). In fact, we’ve just announced the I-Pace in Los Angeles, which is a concept car but it’s a concept car which we’ve also said is destined for production. It’s the first all electric vehicle from JLR and will be branded as a Jaguar product. 

So I think electrification is going to be a big part of everybody’s lives in the future and I think this is the first time that we have come out and said: “This is what it looks like, this is its capability, this is what we’re planning on doing.”

The other area of innovation for us is around the in-car entertainment systems: how the vehicle interacts with your devices and using the internet of things (IoT) and wireless capability to communicate between the vehicle and our systems internally and the diagnostics systems here in Sri Lanka at the factories. So I think generally that the whole area of connectivity is really beginning to come alive. A lot of our most interesting and I think consumer friendly technologies are in that space. 

The other thing of interest just now, and one of the great test beds for technology, has been motorsport. This summer Jaguar came back into motorsports with the launch of our own team in Formula E, the world electric vehicle championship. I know a lot of manufacturers talk a lot about how they’re going to take technology from a sports car and put it into your everyday car, and you can be a little bit cynical about that, but with electric cars there’s a direct need for rapid development of electric vehicle technology, batteries, regenerative power, etc. and that stuff absolutely can be taken directly from those types of programs and fed back into our consumer products and vice versa actually. So there’s very close collaboration between the Formula E team, Jaguar racing and the factory.

Q: When can we hope to see a JLR electric vehicle on the road then?

RC: All of the technical details, pricing and specification of that vehicle will be released mid-2017 and in early 2018 the vehicle will be available for purchase. 

Q: And will it be immediately available in Sri Lanka as well?

SF: We are made to understand yes.

RC: I think what we need to be clear on is whether there is demand for that kind of vehicle in Sri Lanka. With electric vehicles come a requirement for infrastructure and a certain amount of training and testing tools. So the car could be available in Sri Lanka but the question is does Sri Lanka want the car? We think so, but we probably require a little more research before we confirm this. 

Q: What other things are JLR looking at as far as sustainability goes?

RC: As a company we have taken really dramatic steps to reduce our carbon footprint so the output in terms of CO2 (carbon dioxide) from our factories has reduced massively since our awareness, and the general awareness of CO2, its impact on global warming, began to grow. I think probably the single biggest contribution that we can make at a manufacturing level is to reduce emissions and recycle; we achieve certain standards and certifications in our manufacturing plants for our environmental credentials. The real big change we can make then is about reducing the fleet average in CO2. 

So I think the best way to think about that is through the clever use of technology.  For example, we’ve worked our engine capacity down effectively, we still make big engines and we still make some very, very fast cars but we’re now able to replicate the performance of a conventional V8 with a V6 or six-cylinder super-charged vehicle but at significantly lower levels of fuel consumption and CO2 emissions. And across the board we’ve been able to do that. We’ve basically moved down an engine size but are delivering the same levels of refinement and performance for customers. 

The second thing was what I mentioned to you before, that we’ve launched hybrid vehicles and that we’ll continue to expand our offering in hybrid and PHEV. The third thing is that we are now certainly the most advanced manufacturer in aluminium construction. Most of our vehicles are now built with aluminium bodies and it really makes a massive difference.

I’ll give you a good example: the F-Pace which is the new Jaguar SUV which we’re launching very shortly here in Sri Lanka. Its body is made of aluminium, which means it weighs slightly less than the body of a Fiat 500. So when it’s matched up with a comparable 4x4 made of steel it’s massively lighter. The best way to get your emissions down is to reduce weight, and as we reduce weight we also have other benefits as well, for example, we also reduce fuel consumption and actually the performance of the vehicle improves. 

If you take the big Range Rover, we’ve taken something like over 400 kgs out of the weight of the car from the last generation to the present one. There is no amount of technological innovation that will ever compare to making such a huge leap and that has a direct impact on your c02 emissions.

Q: So what do you have to forego to achieve those gains?

RC: On the customer side, nothing. But personally for us it’s more expensive to make, and we don’t raise the price of the cars. That’s the cost that we have to bear but it’s an investment in the environmental performance of our vehicles that we have chosen to make. It makes for a vehicle which is so much lighter, that the only real downside is that from a manufacturer’s perspective it’s still cheaper to build with steel.

Q: Is this a trend you see going forward globally, where consumers may negatively judge a manufacturer for not going with the more environmentally friendly yet more expensive product?

RC: I think so, yeah. I’m not so sure the customer would sit there and say, ‘I have to have carbon fibre, I have to have aluminium’. Of course there are customers who feel that way but I think what they want is a certain level of performance and what we’ve learned is that sometimes making those decisions, those commitments, investing that money is the only way to give them the performance that they want. Also, legislation is driving a lot of this so we have a certain threshold that we have to get below and it requires us to think big in terms of reducing the environmental footprint. 

SF: Even in a Sri Lankan context the other day I actually had a customer who said that with the energy efficiency drives that he was implementing in his workplace, he felt guilty to drive a five litre V8. So the conscience over emissions is definitely becoming a part of the buying decision. We have customers who are waiting for an all-electric car for the same reason. It’s not about the money when you’re buying cars at $ 200,000 plus, it’s not that you can’t afford the gasoline, but genuine environmental conscience is coming in.

Q: Briefly, what’s the resale market like for JLR vehicles?

SF: The resale market is very good. Our main, sort of, backbone of repeat customers is ensuring the resale of the brands we represent. This is down to two things: the ease with which you can sell it and the price at which you can sell it. A measure of a good agent is both those factors. And we have done a lot of work to ensure that we give not only the customers buying our cars new cars but the customers buying the second round and the third round the confidence of the brand and the confidence in our after-sales, and the cost effectiveness of our after-sales service to ensure that the resale value is there. 

– Pix by Ruwan Walpola