One way of looking at the warranty/quality issue is to check how much money has been set aside in the balance sheet to pay for product warranty work such as brake discs, exhaust system components, oil and filters, balancer shafts, and whole engine replacements. The box below shows that in the past 24 months JLR plc revenues have actually declined slightly, when 9 month year-to-date sales are compared at 31st December, the end of Q3.
However, during the same period, product liability provision has actually been increased by £407 million, or 31%, to over £1.7 billion. To put this figure into some kind of perspective, at time of posting this, the whole of Tata Motors including JLR plc was valued at just £6.4 billion ($8.4 billion). In the short term, as the JLR business continues to wrestle with negative cash flows, it is likely that it will want to hold back as much of that product warranty provision as possible. This would go a long way towards explaining the shift to lower value warranty work that has already been reported.
The Group offers warranty cover in respect of manufacturing defects, which become apparent one to five years after purchase, dependent on the market in which the purchase occurred.
The Group offers warranty cover in respect of manufacturing defects, which become apparent one to five years after purchase, dependent on the market in which the purchase occurred and the vehicle purchased. The estimated liability for product warranty is recognised when products are sold or when new warranty programmes are initiated. These estimates are established using historical information on the nature, frequency and average cost of warranty claims and management estimates regarding possible future warranty claims, customer goodwill and recall complaints. The discount on the warranty provision is calculated using a risk-free discount rate as the risks specific to the liability, such as inflation, are included in the base calculation. The timing of outflows will vary as and when a warranty claim will arise, being typically up to five years.
In the previous post we saw JLR figures showing much warranty provision they were holding in reserve on the balance sheet. But how much did JLR actually spend on warranty work? In the last 9 months of 2018 it was approximately £16 million per week, up by over 50% from 2 years earlier, and equivalent to just under one third of the total "pot" set aside.
*Source JLR plc financial reports.
Ford Motor Co. sold 6.6 million vehicles,11 times as many cars as JLR, in 2017. Total warranty provision was £4,000 million. It paid out £2,650 million during the same period. £50 million a week. And I thought Fords were unreliable.
Yes but it's not quite that simple. The average selling price of those 6.6 million Ford units will be a lot lower than for JLR. A better comparison would be warranty cost per vehicle expressed as a percentage of average selling price. The average JLR is also more complicated than the average Ford, so it's not unreasonable to expect a higher warranty cost per vehicle as there's more to go wrong.
Having said all that, hundreds of millions of pounds in warranty costs isn't anything for JLR to crow about!
MY18 2.0 150 HSE manual, Firenze red with narvik black roof, rear tints, 2nd row USB, blind spot monitoring, reverse traffic detection, space saver spare.
On the other hand, Ford DID sell a million of these world-wide last year, virtually twice JLR's total vehicle output. Granted some will have been cheaper models.
17MY DS150PS 6 speed manual. Rejected as "not of satisfactory quality", "not as described", Consumer Rights Act 2015.
A better comparison would be warranty cost per vehicle expressed as a percentage of average selling price.
Extrapolating JLR's first 9 months (x 4/3).
a) A volume car manufacturer?
b) A manufacturer of luxury branded cars?
I think it's been clear to everyone for some time (it is to MD Rawdon Glover at any rate) that JLR still has major issues with quality and reliability. It's that upward trend of 50% in 2 years that should be ringing alarm bells.
Google F150 problems and it's clear all is not rosy for Ford despite making them in vast numbers. They start at sub-$30k.
I do agree JLR's warranty costs are going the wrong way, and I must now admit that the reason I picked up on this thread is that my car is going to be adding to them. Not my wife's DS which after 16 months resolutely refuses to misbehave, but my F-Pace . It looks like it has shot balance shaft bearings, just 5000 miles covered in 4 months. Will hear Jaguar's diagnosis tomorrow/Tuesday once they have assessed audio. Assuming so I will be pushing for a new engine but have been told thats not likely. I'll be putting them on notice that car will be rejected if it comes back with faults or there is a repetition of the fault.
Its such a shame - the car has been fantastic up to this point, and I want to see JLR prosper. I don't want my only choice of premium car to be German.
Which engine do you have in the FPace ? Have only seen one other on the FPace so far.
Most have been turbo noise misdiagnosed , thus the audio file is needed?
Sadly now confirmed that it's the balance shaft bearings and so the balance shafts are to be replaced I have the 2.0d 180. I knew it wasn't the turbo as the change in pitch was directly and instantly in line with rpm. The technician agreed and said turbo was a different pitch and changes in tone slightly lag rpm. It has anyway been confirmed by Jaguar post an audio file being sent, and parts being ordered. I'm seriously unhappy - car is just four months old. Tech also said they'd only had one other Jaguar with this issue. Just my luck, which has been lousy the past year.
I have been given a nearly new RRS as a loaner - what a fantastic car. It has the 306bhp 3.0D which is awesome and even manages to make a great sound. Soooo comfy, the ride is so much better than my FPace. I think I bought the wrong car, or at least the wrong engine.
Has anyone successfully rejected a vehicle and how did you do that ?