Land Rover is at a crossroads in China

The famous British company Land Rover is facing a big problem regarding its future in China. The company is not satisfied with the price gap in the country between its two types of operations and needs to make a decision to avoid a decline in its business.

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Cars manufactured abroad and imported into China are very expensive – on average over R$600,000 for Chinese. Those that it manufactures in the country in partnership with Chery, cost R$220,000.

The company will have to choose between three equally challenging possibilities. The fate of the brand in the Chinese market may depend on its ability to make the right choice between: abandoning its partnership with Chery and only importing more expensive models, switching to electric vehicles and facing competition from cheaper domestic models, or transfer production. to China, but at the risk of making production in other areas impossible.

Ever since Land Rover started its partnership with Chery in China, the brand has benefited from tapping into the country’s fast-growing car market. However, the partnership raised strategic questions for the British carmaker. The first option would be to stop cooperation and choose to import ready-made models, which will result in more expensive cars for Chinese consumers. This approach can harm the brand’s competitiveness in relation to local competitors, who offer similar models at a cheaper price.

The second alternative is the transition to a range of electric vehicles. With the Chinese government’s increasing focus on electrification in the automotive industry, these changes could allow Land Rover to compete directly with cheaper domestic models. However, this option will require significant investment in research and development, as well as rapid modification of the existing production line. The company will have to face the challenge of convincing Chinese consumers that its electric vehicles are a reliable and viable option compared to established domestic brands.

Finally, a third possibility would be to move production to China, using local resources and infrastructure. Although this option could help reduce production costs and improve competitiveness in the Chinese market, it would include the possibility of ceasing production in other parts of the world. Such a move would cause serious harm to the local workforce and economy where Land Rover currently has its factories.

CEO Adrian Mardell acknowledged the problem on a press conference call last week, referring to the high discount rates in China at the moment.

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As the deadline to make decisions approaches, the auto industry is keeping its eyes on Land Rover, watching closely how the world-renowned brand will handle its crisis in China.