Blog: Ford blew it with Jaguar and now Tata has a great opportunity
Dave Leggett | 31 March 2008
I guess the big picture in the Ford-Tata deal for Jaguar and Land Rover announced last week is the seismic shift in the global economy that it points to. A long established Western company, Ford, is deep in the financial mire and having to sell assets just to survive. And it’s an Indian company that has emerged to buy those assets.
The transfer of ownership of two such quintessentially British brands to India has an even deeper resonance for many in both Britain and India when you consider the history of relations between the two countries. And this takes Tata Motors into the big time in one step – these are two major brands with global footprints (by comparison Chinese firms are still struggling to make headway globally).
So, what went wrong with Ford’s JLR stewardship? With Land Rover not all that much (let’s not get into quality issues, they go way back and Ford’s only had LR since 2000). With Jaguar, it went for volume and tried to mix it with Merc and BMW. The strategy failed.
Around the beginning of this decade, Ford decided to really go for it with Jaguar. The idea was to lever off Ford Group platforms to save cost and also reposition Jaguar as a brand to take on the likes of Mercedes-Benz and BMW in the higher volume executive car segments. The theory was certainly seductive. This was Ford’s PAG really coming together.
First we got the S-Type (criticised by some as an overly ‘Americanised’ product, but it wasn’t that bad). The real howler, it turned out, was the X-Type. It never came close to the ambitious targets set for it. Was the Mondeo platform-based car an utter lemon? No, but it simply could not do the job set for it.
I recall the then Jaguar MD Jonathan Browning telling me in 2001, just as X-Type was launching, that the aim was to achieve overall Jaguar volume in the region of 200,000 units annually in the medium-term. The X-Type was supposed to be a big part of the doubling of overall Jag volume from a level of about 100,000 units back then.
In 2004, when I interviewed Nick Scheele (by then Ford COO, but still a Jag stalwart who had done much to turn the brand around on quality) in his office in Dearborn, Jaguar was at around 125,000 units of volume per annum and only just rolling out a diesel-engine on the X-Type – the absence of which had been a big handicap in Europe. He defended the X-Type but acknowledged the problems faced by the late diesel in Europe and a US market that had become a ‘dogfight’ in the X-Type’s segment.
Ultimately, the X-Type simply didn’t appeal to enough people in a segment ruled by the likes of the BMW 3 Series. Jaguar had bitten off more than it could chew with the X.
Losses mounted and Browns Lane bit the dust as an assembly plant.
The cost squeeze seems to have done the trick on moving Jaguar close to breakeven now. The S-Type replacement, the XF, is a car that has had very good reviews. The design eschews the three-box trad-Jag look that constrained the broadening of the appeal on both the S and X. That looks like a good move.
With the XF’s market impact to come, Tata has perhaps taken over Jaguar at a very good time. Annual Jaguar production slumped to just 54,000 units last year. From what I hear, feet are well and truly on the ground at Jaguar these days and the positioning of the brand going forward will be sensitive to the unfortunate experience with the X-Type. Getting Jaguar to around 100,000 units a year sounds like a reasonable mid-term goal; a recovery to a sustainable level, Jaguar positioned firmly in an upscale part of the market. The success of the XF in the market will be crucial, but as the song says, and given where Jaguar is right now, the only way is up.
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