Can Endangered Jaguar Be Saved?
[image no longer available]
Can Endangered Jaguar Be Saved?
Much hand-wringing is occurring at the "Glass House," Ford's corporate headquarters in Dearborn, Michigan, as well as at Jaguar's home in Coventry, England, over what to do about the once-esteemed British marque.
Jaguar is hemorrhaging massive amounts of red ink.
Jaguar's profits are not tallied separately — at least for public consumption — so precisely how much it's bleeding isn't clear. However, Ford's 2004 earnings report, released in January, showed the company's Premier Automotive Group (PAG), which includes Jaguar as well as Volvo, Aston Martin and Land Rover, combined with Ford Europe suffered losses of $626 million. Jaguar largely bears the blame.
That's in stark contrast to Ford's previously stated goal, when it formed PAG, of having the luxury vehicle group generate a third of Ford's total profits.
Even before the January earnings report, Jaguar's situation was clear, and Ford took some actions to cut the flow of red ink. It announced the end of assembly operations in September this year at Jaguar's famous Browns Lane plant, where the company built classics like the XKE, XK120 and Mark II. Production will be consolidated in Jaguar's second UK plant, and the number of platforms used will be reduced.
Ford also announced the elimination of 1,150 jobs, or 15 percent of Jaguar's workforce, and the sale of its Formula One racing team. It abandoned its long-term goal of selling 200,000 Jaguars a year globally, a number that would put it in the league of Audi, BMW and Mercedes-Benz. Jaguar now produces about 125,000 vehicles a year.
At the same time, Ford agreed to pump more money — an unspecified amount — into the legendary nameplate.
Yet, even with these actions, Jaguar isn't expected to break even possibly until 2008, the company said recently.
Jaguar's downward spiral has been accelerated by the weak U.S. dollar since the U.S. is its biggest market. In Europe, Jaguar has been slow to add the diesel engines and station wagon variants that buyers want.
But even before things got dire, Jaguar faced an increasingly ferocious battlefield without the proper ammunition. The number of new models from Audi, BMW, Mercedes-Benz, Toyota's Lexus and a revived Cadillac brand proliferated. Everyone appears to be gunning for Jaguar. Nissan CEO Carlos Ghosn, in defining the Infiniti brand, which is going global, used the words "beauty and power." Sounds like Jaguar.
Further, the luxury segment today, especially in the U.S., means more than cars; it includes sport-utility vehicles, crossovers and even trucks. And Jaguar has exactly none of these.
Clearly, Ford has contributed to Jaguar's plight with its own mistakes. Most grievous was the 2001 introduction of the entry-level X-Type sedan. Based on the Ford Mondeo, the X-Type is a decent car — but it's a Ford of Europe car, not a Jaguar. Watching the covers pulled back as it was unveiled at the New York Auto Show, critics noted it looked like a Buick — or a Taurus.
What's more, having the X-Type share showroom space with the XJ and XK didn't sit well with longtime Jaguar owners, many of whom had remained loyal to the brand during the worst of its quality times before its purchase by Ford in 1989. A recent CNW Market Research study shows Jaguar's loyalty rate has plunged from 85 percent to 38 percent over the past few years.
And the current XJ-Series, while hailed as a technological masterpiece, has not been the commercial success Ford had hoped for.
The solution, if there is one, won't come easy, or cheap.
Ford CEO Bill Ford has been quoted as saying the automaker has not and will not consider selling Jaguar. Instead of selling the problem, Ford says the company will fix it. He sees its path to survival being one in which Jaguar is more exclusive with lower sales volumes. Question is, will that approach put it back in the black?
Many critics insist Ford should just cut its losses and sell or shut down Jaguar. Others contend Ford needs to tap its other luxury marques, like Land Rover, to share underpinnings for models like SUVs that Jaguar needs to match its product lines model for model with Audi, BMW and Mercedes. Land Rover, after all, is using Jaguar engines in its SUVs now.
In the meantime, Ford is pinning its hopes on Jaguar's upcoming new models. The next major one is the XK coupe and convertible, going into production in early 2006.
The press and public got a glimpse of the next-generation XK in the form of a concept car called the Advanced Lightweight Coupe unveiled at the North American International Auto Show in January. Like the XJ, it is a showpiece of technological wizardry, not the least of which is its lightweight aluminum architecture.
But its success is not guaranteed, even in the eyes of Ford's top management. Some think the next XK has far more Aston Martin in it than it does Jaguar.
Not surprising, since it was sketched by Ian Callum, who penned the most recent Astons.
The concept was curiously whisked away shortly after its unveiling in Detroit and was not displayed throughout the public run of the show, although it was recently exhibited to dealers at the National Automobile Dealers Association convention in New Orleans.
In any event, one wonders if the new XK will be enough to postpone the extinction of the legendary cat.