Cheapest Jaguars get kicked to the curb
03-30-05, 06:36 AM
#1
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Cheapest Jaguars get kicked to the curb
By James R. Healey, USA TODAY
NEW YORK — Money-losing Jaguar is killing the cheapest versions of its entry-level X-Type sedan and adding more-expensive X-Types and a $115,000, high-power XJ sedan to regain an image of exclusivity and the profit it hopes that brings.
Jag's move shows that European luxury brands can go too far downscale, or use the wrong products when they do.
BMW moved down-market in the 1990s, but by 1999 had dumped the very cheapest, four-cylinder versions of its 3 Series entry cars because they conflicted with the brand's high-performance image.
Mercedes-Benz sells a relatively low-price, lower-power C-Class lineup, starting with the $27,000, four-cylinder C230. C-Class is Mercedes-Benz's biggest seller in the USA, but C-Class sales are down 29% the first two months this year, according to Autodata.
Jaguar has not only killed the $31,000 2.5 X-Types, but is reducing incentives on 3.0 X-Types. That leaves more money to promote higher-price cars, but it has also helped cut X-Type sales, down 20% this year.
"We're quite deliberately spending far less on incentive marketing for the X-Type than we have been spending, and far less than the competition," says Mike O'Driscoll, head of Jaguar's U.S. operations.
O'Driscoll won't call the moves a phaseout of the X, but says that Jaguar is "looking at our options."
The $46,000 S-Type, next up the ladder from the X-type, seems vulnerable, too. Sales are off more than 20% in a new-vehicle market up 1%, Autodata says. "XK and XJ are the models you think of when you think of Jaguar," O'Driscoll notes. Those are $62,000 and up.
The shift back upscale calls into question Jaguar's 6-year-old strategy of offering cheaper, smaller cars to quadruple worldwide sales to 200,000 a year.
Jag lost roughly $700 million last year as a sales slump meant too little money to pay the overhead on capacity to build so many cars. Jaguar is expected to report a loss this year, says owner Ford Motor. It will shut a U.K. factory in June and lay off 1,150 workers.
Ford CEO Bill Ford has called Jag "a financial dog." He says the expansion plan, begun before he became CEO in 2001, was wrong: "I think that brand is an exclusive brand that doesn't lend itself to big volumes."
Some analysts say that Jag chose the wrong car. Purists consider the X-Type a disguised Ford Mondeo. "It looks like a Ford. It feels like a Ford. Why did they do that?" says auto consultant Michael Maziasz at Michigan-based Maziasz Consulting Services.
"The X-Type wasn't a bad idea; it was bad execution," says Eric Noble, president of California-based consultants CarLab. He thinks Jag needs an entry model, "but they need to do it right."
Contributing: Sharon Silke Carty
NEW YORK — Money-losing Jaguar is killing the cheapest versions of its entry-level X-Type sedan and adding more-expensive X-Types and a $115,000, high-power XJ sedan to regain an image of exclusivity and the profit it hopes that brings.
Jag's move shows that European luxury brands can go too far downscale, or use the wrong products when they do.
BMW moved down-market in the 1990s, but by 1999 had dumped the very cheapest, four-cylinder versions of its 3 Series entry cars because they conflicted with the brand's high-performance image.
Mercedes-Benz sells a relatively low-price, lower-power C-Class lineup, starting with the $27,000, four-cylinder C230. C-Class is Mercedes-Benz's biggest seller in the USA, but C-Class sales are down 29% the first two months this year, according to Autodata.
Jaguar has not only killed the $31,000 2.5 X-Types, but is reducing incentives on 3.0 X-Types. That leaves more money to promote higher-price cars, but it has also helped cut X-Type sales, down 20% this year.
"We're quite deliberately spending far less on incentive marketing for the X-Type than we have been spending, and far less than the competition," says Mike O'Driscoll, head of Jaguar's U.S. operations.
O'Driscoll won't call the moves a phaseout of the X, but says that Jaguar is "looking at our options."
The $46,000 S-Type, next up the ladder from the X-type, seems vulnerable, too. Sales are off more than 20% in a new-vehicle market up 1%, Autodata says. "XK and XJ are the models you think of when you think of Jaguar," O'Driscoll notes. Those are $62,000 and up.
The shift back upscale calls into question Jaguar's 6-year-old strategy of offering cheaper, smaller cars to quadruple worldwide sales to 200,000 a year.
Jag lost roughly $700 million last year as a sales slump meant too little money to pay the overhead on capacity to build so many cars. Jaguar is expected to report a loss this year, says owner Ford Motor. It will shut a U.K. factory in June and lay off 1,150 workers.
Ford CEO Bill Ford has called Jag "a financial dog." He says the expansion plan, begun before he became CEO in 2001, was wrong: "I think that brand is an exclusive brand that doesn't lend itself to big volumes."
Some analysts say that Jag chose the wrong car. Purists consider the X-Type a disguised Ford Mondeo. "It looks like a Ford. It feels like a Ford. Why did they do that?" says auto consultant Michael Maziasz at Michigan-based Maziasz Consulting Services.
"The X-Type wasn't a bad idea; it was bad execution," says Eric Noble, president of California-based consultants CarLab. He thinks Jag needs an entry model, "but they need to do it right."
Contributing: Sharon Silke Carty
03-30-05, 06:58 AM
#2
Lexus Fanatic
As usual, I strongly disagree with the " image " arguments being made here. That IMO is nonsense. There is nothing wrong with the X-Type Jag that a little better engineering and quality control won't fix. So there are some similiarities in platform to the Mondeo...so what? The X-Type's problem ( just like larger Jags ), and the reason it doesn't sell better, is not "image" or the fact that it is Jag's so-called "downmarket " car, but simply the fact that its reliability has not been good....and the word has gotten out. In fact, Jaguar's reliability in gereral, after improving for several years after Ford took over, has taken a marked downturn lately. In fact, if the car were a little more reliable, it would be a real bargain with the standard AWD and its beautiful interior.
So my advice to Jaguar ( for what little it is worth ) is, instead of axing the cheapest version of this car, to just turn the car back over to the engineers and let them fix the car's problems...maybe by hooking up the newer Volvo-derived Haldex AWD system (which Ford owns already) that is well-respected in the industry.
So my advice to Jaguar ( for what little it is worth ) is, instead of axing the cheapest version of this car, to just turn the car back over to the engineers and let them fix the car's problems...maybe by hooking up the newer Volvo-derived Haldex AWD system (which Ford owns already) that is well-respected in the industry.
03-30-05, 04:16 PM
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Originally Posted by mmarshall
As usual, I strongly disagree with the " image " arguments being made here. That IMO is nonsense. There is nothing wrong with the X-Type Jag that a little better engineering and quality control won't fix.
Branding is something I've studied and definitely am fascinated by. While image may not matter to you, it does matter to some (a significant number) in the marketplace. Jaguar screwed the pooch by moving downmarket. Now, not only have they lost their lustre, costing them upper-class sales, they also offer crappy lower-end products that do not really entice entry-level buyers. Ford is right to try and put Jaguar back on a pedestal, but it will take years or maybe decades to repair the damage.
03-31-05, 05:40 AM
#5
Lexus Fanatic
The point I'm making, Iceman, is that you can buy an "image" on paper, but what you actually drive home out of the showroom is a car, not an image....a machine made out of metal, rubber, glass, plastic, electronics, cloth, leather, and vinyl. THAT is what you deal with every morning when you come out to go to work, get into it, and start it up....not what some guy in the marketing and advertising department thinks. THEY are not the guys that will help you if the car breaks down.
THAT is where the X-Type needs work......mechanical reliability.......not in the ad rooms.
I don't know how much simpler I can explain it. If you still disagree....fine. It's an open forum and your opinion is noted.
By the way, I also have a high opinion of many of your posts as well.
THAT is where the X-Type needs work......mechanical reliability.......not in the ad rooms.
I don't know how much simpler I can explain it. If you still disagree....fine. It's an open forum and your opinion is noted.
By the way, I also have a high opinion of many of your posts as well.
Last edited by mmarshall; 03-31-05 at 05:46 AM.
03-31-05, 06:58 PM
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You don't need to explain it any simpler--I think I see where you're coming from.
From a pure mechanical standpoint, the X-Type might make a great vehicle for Mercury to sell (if they fix the engineering things you mentioned). The S-Type could sell well for Lincoln (oops, I guess they already do sell it as the LS, and it's not doing all that well). But for JAGUAR, no matter HOW good the cars themselves are, they just don't seem like a good fit for what that brand is supposed to represent.
Fossil makes some great clothes, sunglasses, and watches. In fact, I think of them kind of the same way you think of Subaru--pretty amazing products when you consider the price point. But I don't expect Fossil to come out with a $10K watch, nor do I think it would sell well if they did.
Gucci is a highly respected maker of luxury goods. Their products command a VERY premium price across the board, despite what I'll generously call questionable advantages in quality over other brands. But if they came out with a line of gear that sold at Fossil prices, the reputation of the whole brand would suffer (even if the cheaper products were of high quality). Exclusivity is part of the equation; the very reputation for priciness helps define the brand.
Again, I think you're a very down-to-earth guy (an engineer like me, by any chance?) who looks at things from a pretty factual point of view. You don't seem to get caught up in image or trying to impress other people with your material possessions. But a lot of people do! And I just think your typical Jaguar buyer used to be somebody who pursued and possessed the finer things in life. That class of people don't generally want to be associated with riff-raff--one of the perks of attaining that financial strata is the luxury of NOT dealing with the masses! When Jaguars are commonly sighted on the street, service lounges are crowded with young punks, and advertising brags about lease rates and incentives, they ARE going to lose that segment of the population. If that segment was their core customer, they've got a problem.
I think they've got a problem, and it appears the CEO of Ford agrees. Time will tell, I suppose.
From a pure mechanical standpoint, the X-Type might make a great vehicle for Mercury to sell (if they fix the engineering things you mentioned). The S-Type could sell well for Lincoln (oops, I guess they already do sell it as the LS, and it's not doing all that well). But for JAGUAR, no matter HOW good the cars themselves are, they just don't seem like a good fit for what that brand is supposed to represent.
Fossil makes some great clothes, sunglasses, and watches. In fact, I think of them kind of the same way you think of Subaru--pretty amazing products when you consider the price point. But I don't expect Fossil to come out with a $10K watch, nor do I think it would sell well if they did.
Gucci is a highly respected maker of luxury goods. Their products command a VERY premium price across the board, despite what I'll generously call questionable advantages in quality over other brands. But if they came out with a line of gear that sold at Fossil prices, the reputation of the whole brand would suffer (even if the cheaper products were of high quality). Exclusivity is part of the equation; the very reputation for priciness helps define the brand.
Again, I think you're a very down-to-earth guy (an engineer like me, by any chance?) who looks at things from a pretty factual point of view. You don't seem to get caught up in image or trying to impress other people with your material possessions. But a lot of people do! And I just think your typical Jaguar buyer used to be somebody who pursued and possessed the finer things in life. That class of people don't generally want to be associated with riff-raff--one of the perks of attaining that financial strata is the luxury of NOT dealing with the masses! When Jaguars are commonly sighted on the street, service lounges are crowded with young punks, and advertising brags about lease rates and incentives, they ARE going to lose that segment of the population. If that segment was their core customer, they've got a problem.
I think they've got a problem, and it appears the CEO of Ford agrees. Time will tell, I suppose.
03-31-05, 08:14 PM
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I gotta go with Iceman here Marshall. 
As a youth, IMO, Jag was up there with BMW and Benz and felt more exclusive. Jag meant special. They chased sales and did it the wrong way. Management just admitted the S-type was too much Lincoln LS and the styling has gotten knocked. THe X-type is a disaster, its quality is atrocious and it looks like the XJ, which is a very old school looking car. Why would young people want a car that looks old? The XK8 is old now and the new XJ which is WORLD CLASS is wrapped in the same old wrapper. A shame.
Jaguar is supposed to be an "image" brand. We are supposed to think of beautiful cars. Instead we think of "Ford".
The new Xk* concept is beautiful but I just got my EVO and CAR and the Europeans think its basically a touched up Aston Martin DB9, they look identical (which IMO is not a bad thing).
Not everyone needs to go downmarket, it hurts the brand. Benz/BMW manage it b/c they offer M/AMG and so many expensive cars, they can afford to offer 1 and C hatchbacks. Jag didn't have that luxury. Even Lexus never offered a 4-cylinder car.
As a youth, IMO, Jag was up there with BMW and Benz and felt more exclusive. Jag meant special. They chased sales and did it the wrong way. Management just admitted the S-type was too much Lincoln LS and the styling has gotten knocked. THe X-type is a disaster, its quality is atrocious and it looks like the XJ, which is a very old school looking car. Why would young people want a car that looks old? The XK8 is old now and the new XJ which is WORLD CLASS is wrapped in the same old wrapper. A shame.Jaguar is supposed to be an "image" brand. We are supposed to think of beautiful cars. Instead we think of "Ford".
The new Xk* concept is beautiful but I just got my EVO and CAR and the Europeans think its basically a touched up Aston Martin DB9, they look identical (which IMO is not a bad thing).
Not everyone needs to go downmarket, it hurts the brand. Benz/BMW manage it b/c they offer M/AMG and so many expensive cars, they can afford to offer 1 and C hatchbacks. Jag didn't have that luxury. Even Lexus never offered a 4-cylinder car.
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