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GERMANY: Jaguar ambitions grow smaller

By just-auto.com editorial team | 6 September 2005

Automotive News Europe reports that the Jaguar XK has a big job: rekindle interest in the iconic British brand and lure customers back into showrooms. The coupe's work begins at the IAA in Frankfurt.

Both Jaguar and parent Ford Motor Co. need a boost. Ford's ambitions to fashion Jaguar into a luxury rival for BMW and Mercedes-Benz have fallen flat. Jaguar has discarded plans to build 200,000 cars a year. Jaguar production will fall below 100,000 this year for the first time since 2000, the year before the X-Type was introduced.

The British luxury carmaker continues to bleed red ink.

"It has been Europe's sick man ever since" Ford bought it in 1989, said David Healy, analyst for Burnham Securities in New York. Ford must decide whether to pump yet more money into Jaguar. Sources say Ford Chairman Bill Ford remains committed to Jaguar.

In the short term, Jaguar's fortunes rest on the XK debut. When he introduced the concept version of the new XK at Detroit in January, then- Jaguar CEO Joe Greenwell claimed it was "is the start of a dynamic new breed."

Jaguar executives made similar claims at the 2002 introduction of the XJ sedan. But buyers shunned the XJ because of its conservative styling. Like the XJ, the XK will be built on an all-aluminum monocoque structure. But Jaguar has dropped plans to build the next S-Type on an aluminum base.

Instead Jaguar will save money by re-engineering the current steel car. Future Jaguars will have to share more components and vehicle architectures with other Ford brands because Jaguar's low volume doesn't justify unique platforms.

Geoff Polites, previously marketing chief of Ford Europe, replaced Greenwell at the helm of Jaguar and Land Rover on September 1. Sources say Polites will restructure Jaguar's global distribution network.

Ford executives have been frustrated because Jaguars consistently finish near the top of customer satisfaction surveys, but don't sell well. Polites must decide which Jaguar models to keep and which to discard.

Industry forecasters predict the crossover vehicle Jaguar dealers have been asking for will arrive in late 2008 or early 2009. It is unclear what will replace the current X-Type. The lower-premium car has not lived up to expectations, especially in the US, Jaguar's biggest market.

Polites and Jaguar Managing Director Bibiana Boerio must find a realistic volume for the brand. And they must stop the flow of red ink. That won't be easy because Ford overestimated Jaguar demand and has too manufacturing capacity, analyst Healy said.

"The luxury field is very crowded with good product," he said. "It doesn't look to me that there are ingredients for making Jaguar solidly profitable."

Automotive News Europe