Jaguar confronts poor quality rap with new cars, long warranties
It’s not often auto executives speak frankly about their brand’s history of making “bad cars.”
But the chiefs at Jaguar — now under new management — know they have a dubious legacy to overcome. The historically British brand, now owned by Indian giant Tata, had become known for building beautiful machines that never quite ran right, with high maintenance costs and low resale value.
Now the brand is addressing that problem head on, with price cuts, perks and long-term warranties.
“The times of bad cars are over,” said Joe Eberhardt, president and CEO of Jaguar Land Rover North America. “This is the next generation of Jaguar. But we need customer confidence to get there.”
Eberhardt, in interviews during last month’s Monterey Car Week, acknowledged that the Jaguar side of the brand has suffered from lingering consumer doubts.
“We have been perceived as a low-volume, high-priced brand,” the executive said. “Jaguar has the reputation that we build unreliable cars that are expensive to maintain.”
To combat that, Jaguar on Thursday announced an aggressive campaign to persuade prospective buyers to give Jaguar another look.
The company has turned expensive options into standard equipment on many models, lowered prices on many vehicles and added extended warranties, while also introducing two new entry-level vehicles that it hopes will expand its reach to younger, more mainstream consumers.
A 2016 Jaguar XF, for example, will start at $52,895 — 9% lower than the comparable 2015 model. A 2016 Jaguar XJ will start at $75,395, about the same as a 2015, but will include as standard a set of options that the company values at $7,000.
All vehicles in the 2016 model year lineup will include five-year and 60,000-mile limited warranties, and free scheduled maintenance for the same period.
The company will also shortly unveil the 2017 XE, which at a starting MSRP of $35,895 will significantly lower the entry point for the brand, and the 2017 F-Pace, a crossover utility vehicle that will expand Jaguar’s reach into a segment it has never occupied.
Jaguar Land Rover — at one time two independent brands but later united and owned by BMW and by Ford — was acquired by the Indian automotive giant Tata in 2008. The parent company has invested about $30 billion into the brand, Eberhardt said, over the last five years.
The company reported earlier this week that Jaguar sales for August were down 3% from August 2014, though sales of the F-type were up 15% for the same period. Jaguar’s 2015 year-to-date sales are off 4% from 2014, the company said.
Sales at sister company Land Rover were better, up 12% for the month over August 2014, for its best year ever. Year-to-date sales are up 20%, the company said.
Eberhardt believes the F-Pace and XE will sharply expand the brand’s visibility, especially among younger buyers, and markedly increase sales – a point echoed by marketing Vice President Kim McCullough.
“Starting this year we will be reaching a far larger target audience that includes a significant number of affluent millennial customers,” McCullough said. “This opens up a new segment to us, with vehicles that will make the brand more accessible.”
The challange, said Kelley Blue Book analyst Akshay Anand, will be overcoming the brand’s reputation as a troubled prestige nameplate.
“The brand has had issues” with the perception that the cars are unreliable and unattainable, Anand said.
“But the cars have gotten better, and the XE and F-Pace are the cars that will get new people in the door,” he said. “Those are the vehicles that will dictate Jaguar’s near-term success.”
Those cars may be key to Jaguar’s long-term success too, said Edmunds.com analyst Jeremy Acevedo.
“Part of Jaguar’s problem is they build cars we covet — but not cars we can buy,” Acevedo said. “They have the sizzle. With the XE and F-Pace, they have the steak to go along with it.”
The warranties will help reassure some buyers, but the company will still have to establish a track record of building high-quality cars, said Consumer Reports director of testing Jake Fisher. The warranties will also help hold company engineers accountable, he said.
“Their sales have been low, so it’s difficult to determine whether they really have turned the corner on reliability,” Fisher said. “The warranty is good policy, from a consumer standpoint but also from an internal standpoint. They will need to engineer in the reliability for their own financial reasons.”
For the XE to succeed, Anand said, it will have to be an attractive vehicle and offer compelling options to compete with the already successful Mercedes C-Class, BMW 3 Series and Audi A4 automobiles that share the segment.
Eberhardt knows Jaguar can’t simply come to market with a mediocre machine.
“There are so many great car choices today,” he said. “Just having the best-looking car is not enough. Good pricing is not enough.”
The long-term warranty, he said, is his company’s best effort to reassure people they are not taking a gamble. “Because of issues in the past, people don’t think of us as a reliable choice,” he said. “That’s where we face the biggest hurdle.”
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