Photo/NBD

Oct. 24 (NBD) -- UK luxury car giant Jaguar Land Rover (JLR) experienced a rough September as its sales tumbled 46.2 percent to 7,439 units in its largest market China and fell 12.3 percent to 57,114 units globally compared with the same period of last year.

In response, it decided to shut down its Solihull factory in the UK for two weeks starting from Monday this week, in a bid to rebalance supply and demand.

In regard to declining sales in China, the car maker said it's the ongoing trade tension to blame, which disrupted the continuation of China's auto tariff policies and held back demand.

However, industry analyst Li Yanwei disagreed and said actually the major reason is the company's slow response to market changes.

For example, Tesla lowered car prices in China about 3 hours after the Chinese regulator announced auto tariff cuts on May 22, although the policy was going to take effect from July 1. Major luxury car brands also announced plans to lower prices the next morning. However, no news was heard from JLR until the afternoon of the day. In addition, it didn't come up with a detailed plan, only saying they were studying the policy.

Another analyst who asked to remain anonymous explained that all JLR cars sold in China are managed by the Integrated Marketing Sales and Services (IMSS), a marketing sales organization run by Jaguar Land Rover China (JLRC) and joint venture Chery Jaguar Land Rover (CJLR). When making decisions, IMSS has to balance the interests of many parties, which slows down its decision-making and keeps JLR away from the best opportunities.

Over-pricing is also a factor that leads to weak sales. Imported Jaguar and Land Rover SUVs were warmly received by the market even with a mark-up in the past, which resulted in overconfidence of the carmaker, reported news outlet Yicai citing a JLR dealership in southwestern China.

The company didn't change its pricing policies even after the localized production in China. In the eyes of the dealership, locally produced Jaguar and Land Rover cars are pricier than rivaling models. In order to increase sales, dealerships lowered retail prices, which raised concern of depreciation in residual value among consumers.

Sales of Jaguar and Land Rover cars have seen declining almost all over the world.

In European markets, JLR is facing a collapse in demand for diesel vehicles and a challenge from uncertainty over Brexit. So it is hard to expect a quick recovery in the regions in the short run. If sales in the Chinese market continue to remain weak, JLR will have problem making profits.

Pan Qing, CEO of JLRC, previously said that the company has taken steps to address huge stockpiles and improve consumer experience. He believes that the company is going to embrace a new start next year.

Email: tanyuhan@nbd.com.cn