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Rashers

Member Since: 21 Jun 2015
Location: Norfolk
Posts: 3507

2014 Defender 110 Puma 2.2 USW Corris Grey

And the new Defender did not get the global audience from the new James Bond film. Well not yet.

Don’t care what anyone says, product placement works. And the postponement of the film must have been a huge blow for JLR

Saying that I didn’t want to race out and get a 2CV after watching Roger Moore bounce one down a hill in Corfu in For your eyes only

I was only ten at the time

22nd Jul 2021 7:38pm

Supacat

Member Since: 16 Oct 2012
Location: West Yorkshire
Posts: 11018

2013 Defender 110 Puma 2.2 XS DCPU Keswick Green

Orchard wrote:
- Not sure you can surmise that Defender has been prioritised by looking at wholesales which are notoriously misleading. They are adjusted for all kinds of reasons like stock levels, supply chain, shipping times etc e.g. if you have too much stock you should/can reduce wholesales without affecting retails, which is a good thing for working cap and cashflow, but it 'looks like' production is falling and scares people.

No surmising, JLR has publically stated for Q1:

"However, this [wholesales] was about 30,000 units lower (c. 27%) than otherwise would have been planned as a result of semiconductor supply constraints and the impacts of Covid-19, although this reduction had been broadly anticipated."

"While the present supply constraints continue, the Company will continue to prioritise production of higher margin vehicles for the chip supply available as well as make chip and product specification changes where possible to reduce the impact."

And the figures:

Click image to enlarge

You'll have to explain how reducing wholesales is a good thing for working cap and cashflow - as wholesales drive both - retails drive neither.

23rd Jul 2021 9:38am

Orchard

Member Since: 07 May 2015
Location: Usually walking the dog
Posts: 258

101 business economics: - The stock in your business is money out but no money in. i.e tied up capital that you can't do anything with = less cash in the current account and negative cashflow = bad.

That is a massive simplification but the principle is sound.

2015 90 XS SW Bowler
1998 TD5 CSW

23rd Jul 2021 11:35am

Supacat

Member Since: 16 Oct 2012
Location: West Yorkshire
Posts: 11018

Wholesales are cash in though?

23rd Jul 2021 12:01pm

Orchard

Member Since: 07 May 2015
Location: Usually walking the dog
Posts: 258

Ok not necessarily. I hoped to keep it simple but its not. It all depends on JLR agreements with their sales companies (NSCs), or their importers for smaller markets. Basically there can be three models for when a co gets the cash for the car.
1. Cash comes in when it leaves the factory, and isn't exported i.e. it is wholesaled immediately, good news. I reckon about 20-25% for JLR

2. Cash comes in when the importer receives it out of their home port, bad news. It could be many months from spending the money on parts and labour to getting the sales revenue, ties up cash

So to repeat if you have more wholesales than you need - cut the build numbers/wholesales it's good for Fin Dir stress

3. There is a Hybrid model to free up working capital where an intermediary (bank) buys the car at the factory gate, owns it until it reaches the local importer/dealer and sells it back. Great for cashflow but costs interest payments on what is effectively a loan.

So getting the balance right between retail and wholesale volumes is a constant and dynamic problem to solve. If you have too much in stock you have to cut production to free up cash.

I am done now!

2015 90 XS SW Bowler
1998 TD5 CSW

23rd Jul 2021 2:28pm

jim4244

Member Since: 13 Apr 2014
Location: Bedfordshire
Posts: 802

2007 Defender 90 Puma 2.4 CSW Zermatt Silver

I know 3 friends who purchased D5 Discovery’s . All had problems with engines, electrical systems and water ingress. All have now moved to other manufacturers and all vow never to ever buy another Land Rover product again…..

Jim

23rd Jul 2021 3:30pm

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