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INEOS Automotive: Chemical giant stepping into the automotive manufacturing space
INEOS is a private multinational chemical company operating out of the UK, with annual revenues of over $4bn. The company grabbed headlines in 2016 when it announced a serious intention to find some way to continue to produce the iconic British vehicle, the Land Rover Defender. Land Rover had announced the winding down of the long running Defender, citing emissions regulations and the old design of the vehicle as the primary reason and is widely expected to announce a new version of the vehicle in the coming years. However, INEOS chairman Jim Ratcliffe had other ideas, originally, he wanted to buy the rights to produce the old vehicle under his own INEOS umbrella, but now that idea has morphed into a plan to completely design a new vehicle based on the original principles of the Defender and nicknamed Projekt Grenadier
This is a particularly curious announcement from the company which is very successful in the chemical arena but has never produced an automotive product before. Even more interesting is that INEOS has setup an entirely new internal division for this purpose, perhaps suggesting the company has further ambitions in the automotive arena. The company has definitely spotted an opportunity, as Jaguar Land Rover has moved away from its traditional customer base and instead operates in premium segments today leaving room for companies to swoop in, but this could easily turn out to be a whim of INEOS’ chairman, rather than a plausible idea for new business.
The Land Rover Defender achieved iconic status, having had a production run of 68 years, with only minor tweaks and updates to its design over that period, eventually the vehicle couldn’t keep up with the requirements of today’s safety and emissions regulations and had to be abandoned by Jaguar Land Rover in 2016. Its main success was due to the vehicle having superlative off road abilities and being cheap and simple to maintain and fix. This led to it being a first choice for a variety of segments: farmers, police and military applications, off-roading purposes, mountain rescue teams and many more, but also was one of the first vehicles to tap into the “lifestyle” segment, where consumers would purchase a vehicle largely for its rugged image.
Trends in the market are likely to have a large impact on INEOS’ adventure into the automotive world and the eventual success of Projekt Grenadier. What became apparent towards the end of the Defender’s life was that it was going to be difficult to justify continuing production when its sales figures were becoming poor, regardless of all the other problems which eventually caused the company to cease production. Vehicle sales had been dropping into ranges where the product became inviable long before 2016 and Land Rover itself had been concerned that sales had rarely got close to the 10k mark for more than a decade.
The automotive industry is going through some substantial change with incumbent players being caught off guard by new upstarts. Much of this is because the established players were too slow to recognize that transitioning away from diesel and petrol engines was becoming a priority of consumers and governments and a gap in the market has allowed some new ambitious players to sneak in. Multiple start-ups and big conglomerates, not previously related to the automotive industry, have announced new ventures in to the automotive world hoping to capitalize on electric vehicle technology.
To read more please visit our website for our full analyst insight on INEOS Automotive: https://www.marketline.com/