Land Rover: I Dream of Africa

Houston, Texas, June 2007

Come with me on my dream of a Land Rover African adventure.

Our local guides will toss your bags on the roof rack and lash them securely, cause it's going to get rough.

African safari, ah yes, a dusty sunrise reveals a line of elephants moving to a water hole, giraffe browsing tall vegetation, and lions stalking antelope in the grass.

Suddenly a Rhino charges, but we gracefully dodge and outrun him, roaring across an ocean of golden savanna.

Our vehicle blows a head gasket and putters to a crawl, but native guides quickly effect a field repair using local grass as a replacement gasket.

We resume our perilous journey through 2,000 kilometers of trackless virgin wildlands.

Racing along narrow jungle single track with tropical vegetation slapping at our windows, we ford creeks effortlessly using our trusty Rover's hydraulic lift and sealed undercarriage.

Barely surviving the harrowing ordeal, we arrive, landing precisely at the appointed hour, at our 5-star resort-hotel.

After a luxurious shower, we emerge James-Bond like, wearing a tux for hors d'oeuvres and cocktails.

Now call the concierge, ask them to send up our opera tickets....

The Secret Life of Walter Mitty

Reality check overdue!

Land Rover's plight is a perfect example of the difficulty faced by a majority of carmakers in the world today.

Today's vehicles are very complex systems prone to failure.

Automotive engineering involves more software development than ever before. The 90% complete syndrome and continual debugging haunt even the best.

Emissions and safety regulations impinge on old technology, and electronic controls dominate every aspect of vehicle design. Consumer electronics, offered as a series of often incompatible options, complicate interior integration.

At many of the world's endangered species brands, which include LandRover, management is in denial, ignoring tough competition until it's too late, struggling to pacify shareholder groups or parent management with next quarters numbers.

Engineering staff, often undermanned and underfunded, cannot complete an integrated package within model development schedule imperatives.

Marketing cover-up leads inexorably to sales debacle, while indifferent customer service, warranty, and dealer support nails the coffin shut.

Victory Garden

In the aftermath of WW II, a motor vehicle industry flourished in Britain. There were MG, Triumph, Rover, Bentley, Rolls-Royce, Aston Martin, Morris, and many more.

As a young man, I loved the British cars, especially James Bond's tricked-out Aston-Martin DB-5 in the 1965 hit movie Goldfinger.

But the ethnocentric British failed to invest in quality or develop global export models.

You would think that they would have been among the first to recognize the globalization imperative.

My 1960's buddies and I drove MG's and Morrises, despite frequent mechanical problems and electrical systems that wouldn't run a handwarmer.

As Japanese cars began to conquer the globe, the Brit industry was among the first to wither.

The first Land Rover was hand made with aluminum coachwork, due to the scarcity of steel in post-war Britain.

Introduced in 1948, the simple, rugged, Willys Jeep-inspired design was intended for sale to England's farmers.

It was an authentic working 4x4, including a power-take-off shaft and accessories.

Sales exceeded expectations for the first ten years, but by 1960 the hard times were over. People wanted "progress", which meant luxury features and softer ride.

Today, Land Rover's niche in the severely overbuilt heavy SUV segment is a luxury brand sold on the basis of its utilitarian heritage.

This is the ultimate oxymoron: "luxury off-road vehicle."

In fairness, in a world full of pretenders, Rovers do offer superb off-road and overland capability, combined with luxury features.

In fact, Land Rovers dominate this narrow segment.

But current ads emphasize civil defense and disaster preparedness themes. OK, so, when the hurricane or container-nuke comes to Houston, we'll just ford the bayou, cut across the park, and escape gridlock in no time.

Hey, don't forget to stop and gas up before the great escape.

Hint: when the electricity goes off, as it does in any real disaster, gas pumps shut down, streets are strewn with parts of traffic lights and buildings, no business is open, and cops get real scarce.

For 2006, Land Rover sold around 48,000 new vehicles in the US, a 3.5% improvement over 2005.

For 2007 through May, sales were down 1.8%, despite the new LR2.

Culture Club

The marque has undergone a succession of owners, including British Leyland, British Aerospace, BMW, and Ford.

In 2000, former Ford CEO Jac Nasser paid BMW $2.8B for Land Rover, as part of a grandiose plan to expand Ford upscale globally. This was to be built on a base of gas guzzling frame-rail pickup/SUV sales in the US.

What part of the 1970's fuel crisis did these guys sleep through?

BMW is a top performing car company. What made Ford think they could do better after BMW's investment of $5B failed to restore Rover Group's profits?

Apparently they planned to put Land Rovers on Explorer/F-150 platforms.

Jac paid way too much for ancient manufacturing plants in Britain, union labor contracts, and antique vehicles and engineering.

Lots of cash has been invested in Land Rovers, both by Ford and BMW.

Since joining Ford's Premium Auto Group (PAG), Land Rover has moved closer to stablemate Jaguar.

A common sales and distribution network, management, component sharing including engines, and common production facilities complete the now common badge engineering scenario.

Ford, now (predictably) in deep financial trouble, must auction off the PAG stable.

Jaguar and Land Rover are likely be viewed as a package by potential buyers.

Cerberus Capital Management, the private equity firm now busy grabbing 80% of Chrysler Group, has shown interest in the PAG brands.

Cerberus perhaps believes they could squeeze anxious labor unions in Britain, or transfer manufacturing to lower cost environments.

Land Rover is in better shape than Jag, and currently operating at a profit.

But Jaguar continues to bleed cash, and their fates are joined.

Many say the deal could be made for as little as $1.5B, though other Ford-friendly sources have made estimates to $8 billion.

With only Volvo remaining, Premier Automotive Group is no more.

Quality Issues at Land Rover

Land Rover has consistently struggled with quality/reliability problems.

Reliability has improved on Ford's watch, now it is second to last.

Consumer Reports lists four Rovers in the 2007 Annual Auto Issue, none are "recommended" there.

With 170 problems reported per 100 vehicles the the brand fared poorly in the JD Power Initial Quality Survey.

Overall the brand earned just 24 stars out of 40, inconsistent with the luxury image.

Most damaging is the newest three-year JD Power Dependability Study (2004 models), which placed LandRovers last by a significant margin (472 problems) over runner-up for worst Kia (432).

The company down there included troubled VW, Izusu (being driven from the US market), and GM Korean subsidiary Daewoo.

These are serious issues for a luxury utility; features which do not work with the dealer network unable to find remedies.

Most of these quality problems do not spring up overnight. They are engineering issues that grow with a underdeveloped brand.

The idea that platform and component sharing will cure a brand's ills is simply mistaken.

For 2006, Land Rover replaced its previously outsourced BMW engines in the Range Rover with newly outsourced Jaguar mills. The BMW designed electrical harness was retained.

Range Rover Sport uses the same Jaguar engines.

These ad hoc appointments mandated new engine management software.

Engine and transmission management is very complex code with conflicting imperatives on fuel and performance management. Even Toyota has struggled here.

Land Rover engineers did not account for all the possible connections a Land Rover has, which Jaguars lack.

Chronic fault codes in the software, with attendant check-engine lights, and dealer visits for resets, were the result.

A car this expensive should have purpose dedicated engines and drivelines, period.

Check out the much less expensive Subaru; low center of gravity horizontally opposed boxer engines, and drivelines designed for the application, not borrowed from the parent company parts bin.

Heavy curb weights, with top of line body on frame rails Range Rovers close to 6,000 pounds, combine with boxy aerodynamics put a damper on performance and fuel economy.

Notoriously fuel thirsty, many of Land Rover's products average in the lower teens on the street.

In my opinion, frame-rail is an obsolete model for all but heavy commercial vehicles.

Future 4 by 4's will have light-weight, stamped chassis elements, not heavy frame-rail build.

Low center of gravity will reduce rollover risk, both on and off the pavement.

Low friction, light weight drivetrain elements will combine with aerodynamic coachwork and efficient power plants to deliver drastically improved fuel economy and emissions.

Rovers, with their succession of landlord corporations, have fallen far behind.

In rural Britain and the world's outback regions, the Japanese competition, with better fuel economy, overall cost-to-own, support, and reliability has displaced Land Rovers.

Dealer Network

150 dealers sell Land Rover's three basic SUV lines, averaging about 20 sales per month.

This is low density, a disadvantage to buyers at deal time, and when service is needed.

A strong point is depreciation, the LR3 in particular has very strong residuals, making leasing more attractive.

Conclusions

Ford's big mistake in the abortive upscale push was in assuming mass market economies of scale could be pursued with these premium brands. The result was a morphing of PAG brands into Fords, rather than an upscaling of Ford. Land Rover cannot be a mass market brand.

Well informed luxury consumers will see through badge engineering.

Asian, German, and a few American competitors deliver better acceleration, fuel economy, and handling.

With prices from $35 to $140k, this fantasy is priced for corporate farmers only.

For these prices buyers could get a very good SUV and a real African Safari.

Perhaps new ownership will separate Rover from Jag and rebuild the brand to fit the premium niche it once owned.

News-Blog Updates for Land Rover

12/17/07 Jag and Land Rover Deal: Tata of India