BackI am not so pessimistic about China: JLR’s Ralf Speth
JLR CEO on China's car market, the Tata Group and why the car maker will not foray into motorsports
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China, luxury car maker Jaguar Land Rover’s biggest market, is not likely to be a drag on growth in the near term despite cooling demand in the world’s largest luxury car market and slower-than-planned progress in production boost at its new Changshu factory, Ralf Speth, chief executive of the company, said on Wednesday.
In an interview, Speth said China will continue to be a 25-million-unit market. He also spoke about the trust Tatas reposed in JLR and the reasons that will not allow JLR to enter the world of traditional motorsport. Edited excerpts:
You have had a fantastic stint at JLR.
Yes, for long. You want to say too long.
But, you have had a fantastic stint.
I think it is not about me. I think business is about people, team. At the end of the day, it is the team that develops very, very good capabilities and we as family stick together and develop more cars focused on quality. Not looking left or right.
Was product the only problem?
No, that was the focus. We had many problems. We had to restructure the business because (Tata Sons’ chairman emeritus) Ratan Tata had bought the business when automotive industry was in bad health after the Lehman crisis happened. It became a really very tough weather, and to arrive in such conditions, we needed a tailor-made strategy, which takes restructuring very, very seriously for sustainable growth.
Ravi Kant (former managing director, Tata Motors), for example, was involved in the restructuring but everyone took that one extra step to come out of this kind of situation.
We want to focus on delivering better cars with better quality and features. I guess you can be absolutely sure that JLR is based on the trust that we got from Tata and having an opportunity to develop our strategy around the fact that we were going to invest disproportionately again in the product creation process to become a better company.
What will be the future growth markets for you?
I hope that India comes up. I don’t see China going to have an impact. It is a huge market. I also see other important markets coming up, and the US and Europe, the UK are getting stronger. We have very strong potential of growth in these markets.
You have had all praise for the Tata management and Indians. But the market has not really matured for you yet.
I think it is the question of the economy. Maybe, we were over optimistic about the growth of GDP and economy in India. But now we see really solid GDP growth. The forecasts are encouraging. So, what we expected between 2012 and 2014, hopefully that is going to come now. With this kind of growth, India can really move up in the ladder. It may become, in the mid-term future, a country with strong prospects for our kind of products. It cannot be a 25-million market like China, but there is certainly room for improvement.
A few of the economists have predicted a global slowdown round the corner. Have you noticed anything like that?
Yes, some economies are struggling. That is a phenomenon around the globe. But at the same time, there is a huge amount of innovation happening in technology. Nobody talks about these trends. This is especially about automotive industry. All technologies involved in a car…whether it is electronic, chemistry or battery technology.
This will change the way we do business.
A lot of companies like Apple are shifting their focus from China to India. For you, it is different proposition. Will your dependence on China continue?
I am not so pessimistic about China. You never know, it is also a question of what’s going on in the rest of the world. We are optimistic that they are going to achieve 7-8% of GDP growth. In absolute figures, it would mean that they will create the same amount of volumes as they did in 2013-14. For Jaguar Land Rover, we sell 100,000 cars, which is nothing in a market that is as big as 25 million.
Ratan Tata in the past has said racing is in Jaguar’s DNA. Do we see it making a comeback in motorsport or F1?
We are now in Formula E. But we will not go in any internal combustion engine motorsport right now. We are still in the vintage car racing. I guess that is enough for now.
What is stopping you from doing that?
At the end, it is taking the awareness away from the core programme and products. We want to deliver solid products. To do that, we need all our attention and money on our customers and not on the race track.
How do you see the world of electric and hybrid changing in the emerging markets?
I guess these will be further steps but it requires infrastructure and political steps. Automotive industry cannot do it alone. We need to come together on this. That has been a trend globally.
How do you bring down the costs?
That’s an issue. I still think we have to do more progress in terms of battery. The current combination does not really deliver the products that customers really want.
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