Howard Wheeldon, Birmingham Post, 13th July, 2009
XF in 2008, XJ in 2009 – two cars that between them will probably define the future success and viability of Jaguar Cars.
Leave aside weak or non-existent markets, future funding and various Tata and Jaguar Land Rover loan issues for a moment and look to the future as it might well be when we have worked ourselves through the current global economic mess.
If – and it is a big if – Jaguar has got its manufacturing and quality processes right and if the pricing is right then this is a company that can do well. By all accounts, the launch of the new XJ went down very well though of course it will be early 2010 before we see the first examples of the car on the road and see whether initial buyers are content with what they have bought.
Even so, if the XJ can repeat the initial success of the XF we should better believe that Jaguar’s share of premium market product could significantly rise. It may be hard to imagine that, given the current weak state of the market, that Jaguar under its new owner Tata might still be able to take on the rest of the premium market and succeed – but don’t rule the idea out.
Yes, I know we have lived with that promise for years – particularly through the miserable late-1980s period following Jaguar’s short honeymoon as the Thatcher privatisation star. Just to recap; fearing that Jaguar might become the potential 1992 election embarrassment the then Prime Minister Margaret Thatcher negotiated a deal that caused the Government’s golden share to be dropped 18 months earlier than planned and Jaguar to be sold to Ford. Thus, much to the disgust of then Jaguar CEO Sir John Egan, the company lost its much valued if shortlived second bout of independence. But to be fair, it wasn’t Mrs Thatcher who allowed the company to get into such a mess.
It is also true that, having paid a fortune for Jaguar, much market share and sales development was expected from Ford. But sadly, it never materialised. Nevertheless, Ford left Jaguar in a very much better state than they found it. They invested heavily in new plant at Castle Bromwich and Halewood and they did something that an independently-owned Jaguar could never have done – they closed Browns Lane, Jaguar’s manufacturing Achilles’ heel.
It is also true that, having paid a fortune for Jaguar, much market share and sales development was expected from Ford. But sadly, it never materialised. Nevertheless, Ford left Jaguar in a very much better state than they found it. They invested heavily in new plant at Castle Bromwich and Halewood and they did something that an independently-owned Jaguar could never have done – they closed Browns Lane, Jaguar’s manufacturing Achilles’ heel.” Howard Wheeldon, Senior Strategist, BGC Partners
For the first time since the original XJ and equivalent upmarket Daimler Sovereign series cars had been launched in 1968, Jaguar seems to have gone completely back to the drawing board to design a replacement for its primary sedan.
On the face of it the car incorporates virtually nothing from its predecessor save the name. Looking at the initial launch photo, the company has come up with a car that certainly looks great – a car that is as sleek as it is also unlike any Jaguar that has gone before and yet one that is certainly worthy of being termed a Jaguar.
I have no idea what Jaguar founder the late Sir William Lyons would actually think of the car but knowing the man I guess that he would probably be pleased. Grace, space, pace was a slogan used to describe the predecessor to the original XJ car – the old Mark 10.
But what about underneath the bonnet? I’ll leave it to the likes of Jeremy Clarkson to describe the inner mechanics as they compare to competitor products from Mercedes Benz, BMW and the like.
There’s the rub though – pretty well all Jaguar cars have enjoyed good looks in the past – even the various revamps of the XJ over the years that certain previous Jaguar chiefs tried to pass off as completely new cars.
But what let Jaguar down until recently has been too many different owners, poor quality production and technique during the 80s and 90s, inadequate if not completely inept manufacturing facilities, inconsistent levels of sales and growth, a very poor record of profitability and a propensity of failure to invest.
Thus, while Jaguar may be forced to become temporarily smaller as lay-offs become the order of the day, I fully believe that Jaguar potentially has an excellent future when the market returns. The new XJ is a reflection of that belief – pity though that presumably because it is a nasty manufacturing company and foreign owned, this is not a view shared by Lord Mandelson and his cronies at DBIS. Shame on them – shame too for the UK economy and jobs.” Howard Wheeldon, Senior Strategist, BGC Partners
Though it saddens me to say it, Jaguar’s relatively poor management through the 1980s came to believe far too much in its own marketing hype. The bottom line was that quality and reliability was frankly appalling and arguably remained so for a few more years following the 1989 acquisition by Ford.
Ford, of course, is now a mere chapter of Jaguar history, though nevertheless it should remain to be seen as a very important one. Ford may have made the odd strategic mistake, particularly in attempting to take the company downmarket. But for all that without Ford it may be right to say that Jaguar could have fallen along the wayside years ago.
The future is now about Tata. It is about future investment and moreover growth in international sales. And while it may well be two or three years before Jaguar brand sales in markets such as the US and Europe get back to where they were, let alone increase due to the benefit of having new and exciting models such as the XJ and XF, that shouldn’t stop the company developing new markets in India and further developing sales to China, Japan and even Russia.
Right now no-one should be in any doubt that Tata remains solidly behind Jaguar and Land Rover. Despite being so far rebuffed by the UK Government in terms of the entitlement the company has to receive EIB development loans, there are no plans to take production away from the UK.
Thus, while Jaguar may be forced to become temporarily smaller as lay-offs become the order of the day, I fully believe that Jaguar potentially has an excellent future when the market returns. The new XJ is a reflection of that belief – pity though that presumably because it is a nasty manufacturing company and foreign owned, this is not a view shared by Lord Mandelson and his cronies at DBIS. Shame on them – shame too for the UK economy and jobs.
[Source: Birmingham Post]
[Editor’s Note: Howard Wheeldon is Senior Strategist at broker BGC Partners.]
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