'Essentially the issue is around the slower demand for our diesel vehicles, but we are closing the plant for two weeks from later this month in order to have the lowest stock levels possible, so that we can properly align supply and demand'
British-based carmaker Jaguar Land Rover will this month stop the production lines at its plant in Solihull for two weeks, in response to weakening demand for their vehicles in China.
Like most prestige carmakers operating in China, Jaguar Land Rover last month suffered a 46.2 per cent sales dive in its single largest market, and where it owns a major factory used to produce cars with Chery.
Dieselgate continues to impact demand in Europe, as well as in the company’s home market, where buyers are required to pay extra tax on diesel vehicles.
These are big issues, according to Ralf Speth, CEO of Jaguar Land Rover, who spoke with CarAdvice in Sydney at the Invictus Games opening.
“Essentially the issue is around the slower demand for our diesel vehicles, but we are closing the plant for two weeks from later this month in order to have the lowest stock levels possible, so that we can properly align supply and demand," Speth explained.
“While we’re only stopping production for two weeks, nobody knows how the global economy will track from here on in, or how long these Chinese/US issues will continue.
"Either way, we have reacted quickly to these situations because you need to make sure you have the right inventory on hand, as you can’t afford to get stuck with stock you can’t move," he went on.
China is the world's biggest car market, so it’s clear Chinese buyer hesitation will have an immediate effect on manufacturing around the world.
The plant stoppage in Solihull is a big deal for Jaguar Land Rover, given five key models – including the Range Rover, Range Rover Sport, Land Rover Discovery, Jaguar F-Pace and Range Rover Velar – are produced there.
“Of course, it also greatly affects our third party suppliers as for the two weeks of production we would need 25 million parts, but even with the stoppage, we feel we are well positioned as a manufacturer in global terms," Speth said.
“We have five global regions around the world and we are more or less nicely balanced in terms of volume across these markets, but depending on the level of downturn in China, the impact is most likely heavily affect the premium car market as a whole, no ifs or buts,” he concluded.