LAND Rover says it will not panic over news its UK sales fell by a third in the last 12 months, together with reports of a global slump in demand for 4x4 vehicles.
The latest figures from the Society of Motor Manufacturers & Traders (SMMT) show the number of new Land Rovers registered in May fell 32.55% compared to the same month last year.
Overall UK registrations of 4x4s fell by 18%, while recent figures show sales of the vehicles in the US have fallen by 30% so far this year.
Demand for the vehicles, including the Halewood-made Land Rover Freelander 2, has slumped thanks to high fuel prices and the global economic slowdown, as well as a growing environmental backlash against so-called “gas guzzlers” that has seen some hefty new green taxes on 4x4s introduced in several European countries.
But the company says it still expects to see sales growth around the world as it sells products such as the Freelander 2 into new markets.
Professor Garel Rhys, one of the world’s leading automotive industry experts and based at Cardiff University, says Land Rover is well-placed to weather the storm as it continues to invest in green technology for its vehicles.
The company has created the green LRX “Baby Land Rover” concept car – and if that vehicle goes into production it is likely to be built at Halewood, offering more security to the plant’s 2,000-plus staff.
The SMMT figures show UK car registrations overall fell 3.5% over the period.
Mark Foster, corporate communications manager for Land Rover, said May 2007 had been a “very strong month” for the company, making the decline seem more steep, but said the fall was in line with the company’s expectations.
“There are a number of factors. The credit squeeze, falling house price equity, lack of confidence, high fuel prices – all of these are bearing down on the premium sector.
“Our expectation for this year is that it will be marginally down on last year. It’s going to be a tough year. It’ll be tough here in the UK and it’ll be tough in the US.
“We were aware of the position in the US, which has got worse, and as a consequence we’ve diverted volumes from the US to emerging markets like China, Russia or Brazil.”
Mr Foster said that if commercial vehicle registrations were included in the SMMT figures, the decline would be smaller.
He also defended the Freelander 2 against the “gas guzzler” charge, saying: “The Freelander does 38 miles per gallon – it’s not a gas guzzler.”
Land Rover says plans to take the lightweight LRX 4x4 into full production are being “strongly evaluated”.
Prof Rhys said the overall economic downturn had finally caught up with the car market and does not believe the decline in the 4x4 market was terminal.
He said that as Land Rover vehicles are much smaller and more fuel-efficient than American competitors such as Hummers, they are well-placed to thrive in a market where consumers want to save money.
“Land Rover is very well-placed indeed,” he said.
“The Freelander 2 is quite a small SUV. It’s not a gas guzzler.
“It’s a 4x4 that’s changed to meet the demands in the marketplace. The Americans have downsized their SUVs.
“It’s too early to say the category is in freefall.”
But Professor Karel Williams, a motor industry specialist at Manchester Business School, said he felt the 4x4 market was facing a prolonged downturn
He said: “These vehicles, because of their gas-guzzling reality and their gas-guzzling image, are not the flavour of the month in any advanced country and so the boom is over.”
alistairhoughton
