The limping cat: In this third part Driven to Write asks why Jaguar continues to under-perform in its most crucial market?
Despite the improvements that took place under Ford ownership and enhanced resources provided by Tata, Jaguar continues to seriously under-perform globally. According to JLR, Jaguar sales rose 13% year-on-year, retailing 49,656 vehicles in the calendar year to date and 6,069 in the month of July alone*. However these figures belie several more troubling factors. Jaguar sales in the once vital American market keep falling.
XF sales were down 51% in June against the same period last year, while XJ sales fell 11% over the same period. Only the F-Type showed growth. Sales, boosted by the newly introduced coupé variant rising 47% against July 2013. In fact, Maserati now outsells Jaguar in the US; a proposition considered unthinkable only 12 months ago**. Overall, Jaguar’s UK sales now eclipse that of the US, raising the question – what has gone wrong for the marque in the land of the free?
Firstly, they lack a compact saloon – and with the forthcoming XE compact saloon not arriving stateside until the 2017 model year, Jaguar dealers will have a much longer wait than they might have hoped. Secondly, the XK grand turismo is being phased out with no direct replacement in sight. This model has traditionally proven popular amongst luxury car buyers in America and many existing owners will not trade to an F-Type – a distinctly different offering. Thirdly and perhaps most vitally, Jaguar has no SUV or crossover on sale in a market that has gone nuts for these vehicles. By contrast, US sales of the Range Rover Sport are up 44% this year, while the Evoque posted an upswing of 31% against figures for June 2013. Jaguar has nothing to offer buyers who don’t want a saloon or a sports car, while their rivals offer a bewildering array of alternative body styles. Jaguar needs to significantly broaden its model range if their share of the US luxury car market is not to contract further. But above all, it needs an SUV or crossover – fast.
As America contracts market for JLR, China emerges in its stead. Constituting a mere 8% of JLR’s net volumes in 2010, the country is now their largest single market, forming 24% of net unit sales last financial year***.
Jaguar’s new XE saloon has the potential to transform Jaguar’s fortunes worldwide. The compact executive saloon sector is amongst the most vibrant in the auto market and if XE is sufficiently attractive to buyers, Jaguar’s volume could more than double. It certainly needs to. JLR maintains the break even volume for XE is around 70,000 units per annum. In a growing sector, this is an achievable goal, but it relies upon the product being right. If it succeeds, Jaguar could double its output within two years. If they take the decision to add a CUV to their range – (and by heavens they need to) – this could rise to over 200,000 units annually; making Jaguar both viable and profitable for the first time since the mid -1980’s. However, should XE fail, they could have another X-Type on their hands; a car that never met its lofty sales projections, lost Ford $billions and indirectly lead them to consider offloading Jaguar to Tata in the first place.
Getting it right with Jaguar will be crucial to JLR’s long-term plans for stability, giving them a car brand with heritage, kudos and market mobility. It is possible to imagine Jaguar being anything from a small hatchback to a luxury Crossover – the crucial issue will be execution. Despite the muted initial response to the new XE from some quarters, experts appear to be more enthusiastic, with IHS Automotive suggesting to Automotive News this week that XE will likely be a success. Nevertheless, there remains some work to be done not only to convince the doubters, but also to see Jaguar as a positive contributor to JLR’s bottom line.
** The Truth About Cars