Jaguar Land Rover looks for headway in the U.S.
British cars have always had a particular flair, distinct from the rest of the industry. They’re also famous for making mechanics rich and owners poor.
For Jaguar Land Rover to make headway in the U.S. market, it will have to capitalize on the former and fix the latter.
The automaker, a merger of two storied British brands under new Indian ownership, displayed that flair Wednesday at the Los Angeles Auto Show, introducing two spiffy new Jaguars and a redesigned Range Rover. Company executives describe the L.A. show as crucial to their growth strategy, calling it ground zero for their “modern day British invasion.”
“Brands are made in America,” said Andy Goss, Jaguar Land Rover North America’s president. “And there are not any places in the States more important than the L.A. market.”
Jaguar Land Rover, now a subsidiary of Tata Motors Ltd., India’s largest automobile company, plans to spend $3 billion this fiscal year on research and new products, Goss said. The Jaguar F-Type convertible, Jaguar XFR-S sedan and Range Rover, all making their North American or global debuts this week, are “the fruit of that investment.”
“The company has been investing an enormous amount of dollars in creating brand new products,” Goss said.
The $99,000 XFR-S model will be the most powerful sedan in Jaguar history, Goss said. The automaker will sell only 100 in the U.S. during the 2014 model year.
The next-generation Land Rover Range Rover — which the company calls the world’s first sport utility vehicle with an all-aluminum body — will lose 700 pounds and gain performance and agility. Fuel economy on the new model jumps 14% to a still-thirsty 16 mpg in combined city and highway driving. It goes on sale in December with a $83,500 starting price.
The Jaguar F-Type, a new rear-wheel drive, two-seat convertible, is also wrapped in aluminum, keeping the weight down to about 3,500 pounds. It offers three engine options, with horsepower ranging from 340 to 495. Designed to evoke Jaguar’s iconic E-type convertible, it goes on sale in early summer and will start at $69,000.
The company sold about 45,000 vehicles in the U.S. through the end of October. That’s up about 13% from the same period last year but lags the overall industry growth rate slightly. The U.S. market accounts for about 15% of Jaguar Land Rover’s global sales.
Goss said the new vehicles will grow sales in the U.S. The new, swooping Jaguar will compete with high-end sports cars offered by German rival Porsche and bring people to dealerships, he said.
“It will provide the emotional fulcrum that the brand has missed for quite a long time,” Goss said.
But the automaker’s biggest hurdle will be convincing buyers that the high-priced cars won’t cost them another fortune in repair bills and plummeting resale values.
Jaguar rated 28th out of 32 brands in the 2012 J.D. Power & Associates vehicle dependability study, which asked drivers about their 2009 model-year vehicles after three years of ownership. The Land Rover brand was rated below average and Jaguar near the bottom in this year’s J.D. Power study of the rate at which automotive brands retain their existing customers. Moreover, Jaguar came in dead last in this year’s predicted reliability study by Consumer Reports.
“They make cars that look good, and in the case of Jaguar, they drive very nicely. But they have had quality issues. The vehicles are not well put together,” said Jake Fisher, automotive test director for Consumer reports. “It is unclear whether they have the expertise to make truly quality vehicles.”
Jaguar Land Rover is one of the smallest automakers selling vehicles in the U.S. — its global sales of 294,000 autos this year is less than the volume of Toyota Camry sedans sold in the U.S. Based in Mumbai, the parent company was founded by Jamsetji Tata in 1868. The large conglomerate makes and sells cars, food and beverages, steel and pharmaceuticals. It even owns hotels in New York, Boston and San Francisco. In what some Brits might see as an irony, a sister company makes Tetly and Good Earth teas.
Tata purchased the two British brands from Ford Motor Co. in 2008 for $2.3 billion and folded them into a stand-alone British company.
The Indian company is new to the luxury auto business.
“They deal in vehicles that are appropriate to the local market there: a lot of small, inexpensive passenger vehicles that, by western standards, are very crude,” said Ed Kim, vice president of industry analysis at AutoPacific Inc., an industry consulting firm. “I doubt that any would meet federal safety standards here or any of the European regulations.”
To their credit, the owners in Mumbai understand that Jaguar Land Rover can’t be turning out the same vehicles or sharing parts and components. They have left the design, engineering, manufacturing — even the bean counting — on English soil, Kim said.
He noted that by some measures, the company is improving its reliability and customer service. Jaguar, for example, was ranked second behind Lexus in the 2012 J.D. Power initial quality study, which surveys drivers about their vehicles after 90 days of ownership.
Goss discounted the criticism from Consumer Reports as irrelevant to the market for Jaguar Land Rover.
“Consumers who read that publication and buy our cars are a very small population,” he said.
Goss may have a point, said Jessica Caldwell, an analyst with auto information company Edmunds.com.
“A lot of people right now buy on the image of these brands,” she said. “Kim Kardashian drives a Range Rover. Jennifer Aniston drives a Jaguar. So reliability isn’t as big a purchase influencer.”
