Press Report : O’Driscoll goal – rev Jaguar sales to Porsche level

Diana T. Kurylko, Automotive News Europe, 1st December, 2008

In the long run, a repositioned Jaguar selling only premium cars could achieve the same sales levels as Porsche, says Mike O’Driscoll, managing director of Jaguar Cars Ltd.

That would mean annual global sales of between 100,000 and 120,000 vehicles, rather than the Mercedes- Benz level of more than 1 million units, says O’Driscoll. But that’s a significant increase from the 70,000-unit sales Jaguar expects this year, up from about 60,000 units last year.

O’Driscoll would not predict U.S. sales for this year. Through October, Jaguar had sold 12,575 units in the United States. The new Jaguar concentrating on high-line vehicles is looking at a starting sticker price of $50,000 for its cars, he says.

O’Driscoll, 52, and Gary Temple, 65, president of Jaguar Land Rover North America LLC, were interviewed at the Los Angeles Auto Show by Staff Reporter Diana T. Kurylko.

How far along are you in repositioning Jaguar as a premium luxury brand?
O’Driscoll: We’ve been remaking Jaguar for a couple of years now. The XK (grand touring coupe) was the start of this rebuilding, and reaction to it continues to be terrific. The XF (sedan, replacing the SType) is the cornerstone of the brand in volume because of the size of the segment. It has been a revolution to me. Reaction from the media, our dealers and, more importantly, from our customers has been absolutely terrific.

You launched the XF last spring. Are sales proceeding where you wanted?
O’Driscoll: We are remaking Jaguar into the sporting company that it always was.The past decade was traumatic in many ways, but Jaguar is Jaguar again. The support for the direction has been tremendous.

From Tata, your new owner?
O’Driscoll: Of course from Tata, but support from all of the folks who love the brand. It has been tremendous as we focus on more upscale segments and concentrate more on the true luxury market.

What’s the starting price?
O’Driscoll: About $50,000 and up. As we focus on the luxury market, it is far less about the quantity of the cars we are selling but far more about the quality of our sales. Building beautiful fast cars is what we are all about.

How long will it take you to reach that point, and how quickly do you need new vehicles?
O’Driscoll: We are two years into it, and we have another two or three years to go. We’re making great progress, and we have a very passionate, dedicated team working on it.

I know you have a replacement for the XJ and new engines coming, but what vehicles are crucial to reposition the brand? What vehicles do you need?
O’Driscoll: We have the XK, the XF and the XJ (flagship sedan), which is the quintessential Jaguar in many ways. I have said many times I would love us to build a sports car.

As in a sports car like the Mercedes-Benz SL?
O’Driscoll: No, like the Porsche 911. It’s the benchmark. Everyone who joins Jaguar joins it because they love sporting cars and performance.

How far along is that car in the approval process?
O’Driscoll: You can ask, but I am not going to talk about it.

Have you discussed it with Tata?
O’Driscoll: We talk to Tata Motors about our entire business and product plan. We have their full support and encouragement.

And their funding?
O’Driscoll: We are working really well together.

Where does volume need to be to give dealers a good return on sales and a good throughput?
O’Driscoll: To put it into context, Mercedes-Benz and BMW make more than 1 million cars a year. Porsche makes 100,000 to 120,000. At Jaguar, this year we will retail about 70,000 cars worldwide, up from 60,000 last year.

So how long will it take for Jaguar to sell 120,000 cars a year?
O’Driscoll: I am going to stay away from volume projections, believing that if we build great cars, we will be successful.

You have very high inventory in the United States — 249 days on Nov 1.
O’Driscoll: The days supply across the board for the entire industry looks high at present only because sales have fallen away in the United States for the past 30 to 90 days. It will take a few months to adjust between supply and demand.

Can you deal with the inventory you have now without offering heavy incentives?
O’Driscoll: We are managing the business well. I will let Gary Temple, (president of Jaguar Land Rover North America LLC) talk about North America specifically.

Where would you like to see volume in the United States?
Temple: Like Mike said, I do not think there is a volume (target). What we need is our dealers to be profitable. With the models we have coming, that will be our strategy. It will not necessarily be based on volume.

But some of your dealers aren’t doing that well.
Temple: That is no different from what the industry is facing.

There are still many profitable Mercedes-Benz, BMW and Audi dealers. Return on sales is considerably above the average. I’m not comparing you to the volume brands but to the luxury brands you aspire to compete with.
Temple: There are a number of different ways in how we price our cars, what the model mix is and how we can make our dealers profitable. That is what other smaller manufacturers are going through right now.

How do you work with Tata? Is the company hands-on or hands-off? How different is it from being under Ford ownership?
O’Driscoll: Tata Motors owns Jaguar and Land Rover. We have a very good working relationship with the Tata executives. They are encouraging us to run the business autonomously and with a spirit of independence. That spirit is in many ways a great definition.

Are you expected to self-fund new-vehicle programs?
O’Driscoll: I am not going to talk about funding. We are expected to run our business independently. We need to grow the business.

Under Ford ownership, you had access to parts, engineering expertise and technology. Do you have that with Tata?
O’Driscoll: Look at the cars – the XJ was developed at Jaguar.

So the sharing ended when you discontinued the smaller car, the X-Type?
O’Driscoll: There was probably some commonality with the smaller car.

That’s a bit of an understatement for a car based on the Ford Mondeo.
O’Driscoll: That’s British understatement. The XF, XK and XJ are pure Jaguar.We are in a process of transitioning, and our dealers are also in the process of transitioning from a higher-volume focus with cars like the X-Type (small sedan) in the range to a more exclusive lower volume, where dealer gross will be stronger on the average.

We have a dealer network that we are immensely proud of and it is excelling. Earlier this year, we placed number one in the J.D. Power and Associates CSI (customer satisfaction index survey), and we placed number one in SSI (sales satisfaction index). That is an incredible achievement. The U.S. business is in good shape. We are making good progress.

[Source: Automotive News Europe]

Clive Goldthorp

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