The launch of the new Land Rover Evoque was partly responsible for Land Rover’s growth. Credit: Motoring Research.

Jaguar Land Rover sees a recovery in its turnaround plan for China after a prolonged slump contributed to its £3.4-billion (US$4.4 billion) loss in the first quarter of this year, Automotive News Europe reported.

Despite the slumping car market in China, the British automaker posted sales growth for the past three months in the country.

“The market is down, but we are growing by double digits, so not bad,” CEO Ralf Speth said in September at the opening of JLR’s new development center in Gaydon, England.

China sales of JLR cars climbed 18% in September to 8,779, 17% in August to 8,783 and 40% in July to 8,661, the report said.

Felix Braeutigam, JLR’s chief commercial officer, is optimistic about the automaker’s China business but cautious.

JLR is seeing the first signs of a rebound but “I am not saying, yes we have managed the turnaround,”  Braeutigam told journalists at the Frankfurt auto show in September.

China was JLR’s biggest profit generator for much of this decade after the region grew to become the become the company’s largest global market, the report said.

At its height, JLR was making £60,000 (US$77,862) of profit on each of its luxury Range Rover SUVs sold in China, Bernstein Research analyst Max Warburton estimated.

Sales, however, crashed 22% last year to 114,826 units, amid a general market downturn.

The slump downgraded China to the fourth-largest for the company. JLR initially fought to keep market share by discounting the models it builds in its factory there but has since taken a different tactic.

“One reason we had a difficult year last year was that we took a conscious decision that we don’t want to compensate for the overall slowdown [in China] by pushing volume at any cost,” Braeutigam said.

China will remain the world’s largest premium market, but it will be harder to do business there, he said. “There is a lot of gold, but it will be more and more expensive to extract it,” Braeutigam said. “It’s becoming probably the most aggressive and most fought-for premium automotive market.”

JLR plans to scale back its sales ambitions in favor of profits. The plan had been to focus on being a more boutique manufacturer that has the power to entice customers without the need for a discount, Braeutigam said.

We feel our brands are so premium, so exclusive, that we want to create demand, not push supply,” he said.

The growth depends largely on Land Rover, whose sales rose 36% in August to 6,565 units, compared with a 39% decline for Jaguar to 2,028, according to figures from market analysts JATO Dynamics.

The launch of the new Evoque was partly responsible for Land Rover’s growth, with 591 sales in August, compared with 381 for the same month for the year before, JATO said.

JLR CFO Ken Gregor, who is leaving the company, told investors earlier this year that the business would continue to bleed cash and report another loss for the first quarter of fiscal 2019 before returning to more sustainable profitability, the Wall Street Journal reported.

“It will take a couple of years to get from where we are now to where we’d like to be,” Gregor said. “It doesn’t mean we aren’t doing anything, it just means that it takes time.”

JLF is also teaming up with BMW to develop next-generation electric-vehicle technology, a move intended to share the rising costs of research and development in battery-electric and hybrid cars, the company said.

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