6 CYLINDERS OF OUR VALUECREATION ENGINE
As part of our strategy, we have prioritised six areas for the Tata Motors Group, which form the six cylinders of our value-creation engine. The six cylinders represent our key value drivers. Identifying these drivers will help us take focused actions on areas that will have the greatest impact on value.
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Did you know?
Tata Motors was the first to introduce a unique indigenous Vehicle Tracking and Bay Scheduling (VTAB) system for customers to keep a track of the repair or maintenance work being performed on their vehicles while being ensconced in the customer lounge at a Tata Motors service centre!
Jaguar was the creator of the world’s first disc brake in 1953, an industry leader in aluminium lightweighting and closed-loop recycling.
Land Rover has 70 years of off-roading experience providing extensive know-how and patented technologies, such as Dynamic Stability Control and the industry-leading Terrain Response.
JLR and CJLR
A PLAN TO TURNAROUND AND TRANSFORM
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JLR has created an outstanding, award-winning product portfolio, grown as a global player in the premium car segment and delivered a solid business and financial performance over the decade of Tata Group's ownership. JLR vehicles represents a compelling combination of British design and engineering integrity. Chery Jaguar Land Rover (CJLR) is a 50:50 JV formed between Chery Automobile Co Ltd. and JLR. CJLR manufactures world-class products, which include Range Rover Evoque, Discovery Sport, Jaguar XFL, Jaguar XEL and Jaguar E-Pace.
The foundation is strong with two iconic premium brands. Jaguar is one of the world’s premier luxury sports saloon and sports car marques. Land Rover is the world’s leading manufacturer of premium SUVs. Recent successful model launches, including award winning I-Pace, Hybrid Range Rover, Range Rover Sports and the new Range Rover Evoque, have broadened the product range to existing and new customers in established and emerging segments. The excitement continues with the iconic Defender to be launched later this year.
Jaguar Land Rover has delivered solid performance over the long term, through exciting products, strong profits and investing in its future. Between FY 2010-11 and FY 2018-19 JLR has:
- Increased revenues to GBP 24 BN (12% CAGR)
- Generated PBT of over GBP 13 BN (before exceptional items)
- Generated ~GBP 27 BN of operating cash flow before investment of ~GBP 25 BN in new products, technology, capacity and infrastructure
JLR has witnessed unprecedented challenges in the last fiscal, which includes weak market conditions in China, muted industry conditions in other markets, geopolitical uncertainty with rising populism, and tariff and trade tensions, along with high fixed cost structure: all of which severely impacted the financial performance.
Given the above challenges, JLR is gearing up for the next phase of its turnaround and transformation through: Project Charge and Project Accelerate.
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PROJECT CHARGE
JLR has launched Project Charge in response to the unprecedented market, technological and regulatory challenges that are impacting its current financial performance. The objective of this programme is to identify and implement at speed, short-term gains to improve cost, cash, revenue and profitability.
Positively charged
Through decisive actions, JLR will reduce investment spending by GBP 1 BN, improve working capital by GBP 500 MN and make GBP 1 BN of profit growth and cost efficiencies, all by the end of FY 2019-20. Project Charge is on track to achieve its GBP 2.5 BN target, with GBP 1.25 BN of benefits already delivered during FY 2018-19.
These comprise the following:
- A GBP 700 MN reduction in investment (of GBP 3.8 BN versus the GBP 4.5 BN originally anticipated) following rigorous spend reviews to identify non-core and non-product investment savings without compromise to JLR's revenue-generating product plans;
- GBP 400 MN of working capital improvements, with inventory reduced by GBP 800 MN since September through actions including improved production and demand management enabled by advanced forecasting and analytics; and
- GBP 150 MN of savings in costs including labour overhead savings through a workforce reduction programme.
Paving the way to a sustainable, profitable future
Reducing the size of JLR's global workforce by 6,000 is expected to deliver over GBP 400 MN of ongoing cost efficiencies, starting from FY 2019-20, with further cost savings expected as Project Charge continues its review of costs, including commercial, purchasing and marketing activities. Project Charge will also maintain a focus on investment spend and working capital to identify, deliver and sustain the additional savings necessary to meet JLR's GBP 2.5 BN target.
The cost and cash improvements achieved by Project Charge enable vital ongoing investment into next generation ACES products and services to deliver experiences that people love, for life.
CHARGE ON TRACK
JLR has already taken significant steps towards reducing investment spending and identifying various cost reduction opportunities. Out of the target GBP 2.5 BN, GBP 1.25 BN benefits have already been delivered in FY 2018-19.
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PROJECT ACCELERATE
The focus of Project Accelerate is medium to long term. The key focus areas of the project are to enhance sales performance, deliver competitive variable cost, reduce delays and improve quality. JLR launched Project Accelerate to simultaneously drive large-scale systemic and structural change with root-and-branch reviews of all of its processes and working practices. It has planned a set of actions for each of these focus areas.
Reducing delay and improving quality
As a medium- to long-term plan, improving quality and reducing delays become crucial. In order to meet these objectives, JLR plans to optimise resource planning. Improved quality is also related to the commonality between products and the drive consistency between them. Modularity will help in consistent production planning and reducing delays. That said, these objectives cannot be met without bringing in a process discipline and vendor collaborations and stepping up risk management and change management. Underpinning all these action areas is the way JLR brings in process quality and brings about a change in enterprise-wide systems.
Delivering competitive material cost
To deliver competitive costs, JLR will focus on purchase lifecycle planning and customer value-driven standards. At the same time, it would like to minimise per unit manufacturing costs by making a strategic choice between 'make' or 'buy'. This would require a change in the global material sourcing strategy. JLR makes the 'should cost' and 'should design' analyses with a thorough benchmarking process.
Enhancing sales performance
JLR plans to work on the pricing, positioning and launch approach of its products, while providing valueadded products and features to its customers. JLR is also focusing on customer marketing effectiveness, while expanding the network coverage. The goal is to improve customer perception of product quality and services. JLR seeks to 'fix right first time' with rapid diagnosis and prompt issue resolution.
JLR is also reviewing its organisational design and business behaviours to improve role and process clarity. By evaluating and improving its core systems, its culture and the ways it works, JLR will create greater efficiency and drive a relentless focus on quality and competitiveness throughout the organisation.
PRIORITIES FOR THIS YEAR
JLR has clearly laid down its focus areas to be implemented this year.
- Successful launch of the iconic Defender
- Implementing the flexible Modular Longitudinal Architecture (MLA)
- Turn around the performance in China
- Drive sustained benefits through Project Charge
- Deliver fundamental transformation through Project Accelerate
Further JLR is also focusing on achieving the investment efficiency through:
- An emphasis on core portfolio, together with a rationalisation of niche, non-product spend (like Evoque Convertible and Range Rover SV Coupe)
- A simplified offering by reducing powertrain complexity (like >50% certification reductions and no V6 in Jaguar XE/XF)
- Innovative collaborations (like Waymo and I-Pace, BMW and EDUs)
Steps towards safeguarding the future
JLR through its two iconic brands, future generation product portfolio, technical capabilities and turnaround and transformation programmes will pave its way towards Consistent, Competitive and Cash-accretive growth.
Key capital trade-offs and interlinkages of the Turnaround and Transformation plan
A pragmatic interplay across Financial Capital, Human Capital and Manufactured Capital will help drive long-term profitability and efficiency.
Social and Relationship Capital has been enhanced through improved customer service quality, improved dealer management and collaborations with vendors for sourcing efficiency. This will also result in enhanced Financial Capital.
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