Retail Front

Jaguar Lowers Prices in Bid to Increase Sales

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Jaguar sold 15,773 units in the U.S. last year. BMW delivered 395,850. “Clearly, we are not at scale,” says the head of Jaguar’s North American operations.

Jaguar can roll out the scroll when it comes to how many people are admirers. The list is a mile long.

But as far as how many car consumers put Jaguar on their shopping list, that one’s about 5,000 feet shorter.

They like Jaguars, from the styling, to the racing heritage, to the English blue-bloodedness. But not that many Americans buy them.

“People say, ‘It’s a great car, a great brand, but I can’t afford it,’” says Joe Eberhardt, president and CEO of Jaguar’s North American sales unit. “Jaguar has had price-perception issues.”  

What’s an auto aristo do do? Cut prices. 

You won’t find fire sales at Jaguar dealerships or customers cross shopping the XJR with the Mitsubishi Mirage. But the U.K. brand is embarking on a competitive pricing strategy in a bid to boost sales. Eberhardt speaks of lower MSRPs, increased content and, in some cases, both for new models.

For example, a second-generation ’16 XF starts at $51,900, which is 9% less than the outgoing model. The automaker bills the ’16 XJ as containing $7,000 in extra standard equipment, but at no price increase. 

“We need to be competitive in leasing, too,” says Eberhardt, referring to plans to get out of the niche and go up against the likes of BMW, Mercedes and Lexus, the U.S. luxury segment’s sales triumvirate.    

Jaguar’s price reductions are a form of volume pricing. The reasoning goes like this: Lower stickers increase the number of buyers. That brings in more money. Economies of scale then kick in.

Jaguar sold 15,773 units in the U.S. last year, a 7% drop from 2013, according to WardsAuto data. By contrast, BMW delivered 395,850, a 5.3% increase.

“Clearly, we are not at scale,” Eberhardt says at an Automotive Press Assn. appearance in Detroit. “We have to grow for scale to take effect.” 

Another new initiative to put Jaguar on more shopping and buying lists is a better factory warranty plan. The brand bills Jaguar EliteCare as best in class. It includes a five-year/60,000 mile (96,000 km) limited warranty and free scheduled maintenance.

Offering that coverage gives peace of mind to people who ask, “‘What happens if my car breaks down?’” Eberhardt says.

Jaguar makes reliable cars these days, as evidenced by its high ranking in J.D. Power quality surveys. But to some extent, the brand is still trying to shake off a poor-quality reputation from the 1960s and 1970s.

Back then it often wasn’t a question of if an expensive Jaguar would break down but when. Part of the problem was with suppliers such as Lucas Electric. It infamously earned the title “Prince of Darkness” because its components, including headlights, were prone to fail without warning. (The unofficial Lucas motto: “Get home before dark.”)

Jaguars of that era were like crystal glass, beautiful but fragile. You’d think they were made in Waterford, not Birmingham.

That’s no longer the case, but “perception is reality,” says Eberhardt. The sweetened warranty is intended to help convince lingering doubters that times have changed.

Jaguar is introducing a cadence of new product, including its first-ever CUV, the ’17 F-Pace. Think Porsche Cayenne, says Eberhardt. He vows the F-Pace will not siphon sales from Jaguar’s SUV sister brand Land Rover that  delivered 51,465  units in the U.S. last year, according to WardsAuto.   

Land Rovers are for off-roaders and mountain climbers. And the F-Pace is for whom, social climbers? Well, no, rather affluent people who want a vehicle with a measure of utility, but who won’t go off the road with it. Not intentionally, anyway.

At his Detroit appearance, Eberhardt shows videos and TV spots heralding the new lineup (and Jaguar EliteCare). Undoubtedly, Jaguar makes beautiful cars. They’re tout-worthy. But a British-accented voiceover waxing excessively about product sumptuousness, suaveness and seductiveness seems more like cloying self-glorification than proud product pitching.

Eberhardt is a German native stationed in the U.S. representing a pair of U.K. brands owned by an Indian automaker, Tata, that bought JLR from Ford in 2008. 

He previously held sales and marketing positions at Mercedes-Benz and the defunct DaimlerChrysler. He became JLR president in late 2013. “This is a once in a lifetime opportunity,” he says of Jaguar’s plans to go big time. “It’s too good to mess up.”

sfinlay@wardsauto.com

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Steve Finlay

Steve Finlay is the editor of WardsAuto Dealer Business magazine and a senior editor for WardsAuto.com. His journalism career started 42 years ago as a crime reporter. A Michigan native, he likes...

Jim Ziegler

Jim Ziegler, president of Ziegler Supersystems, is a trainer, commentator and public speaker on dealership issues.
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