A traditional British brand. A great history. Businessmen love it. Strong in the home counties. Younger people don’t have much idea what it stands for, and probably wouldn’t want it if they did. If these were the political pages, you’d assume we were discussing the Conservative party. But this is the Business section, and we’re actually talking about Jaguar.
Just like the Tories, Jaguar is an illustrious name with a great history. If you look closely, it also has some pretty good products. Yet it has seen its share of the market shrink. The world appears to have moved on around it. Jaguar needs to re-invent itself for a new era. The big cat can be saved — but, like the Conservative party, it needs to be completely restyled. The issue is whether Jaguar’s owner, Ford, can still do that, or needs to hand the task to someone else.
Of all the historic names of the British motor industry — Austin, Rover, Morris — the only one that has struggled into the 21st century almost intact is Jaguar. The maker of such legendary cars as the E-type, still regularly voted the most desirable car ever made, stumbled into the public sector as part of British Leyland, stumbled out again, and wound up as a unit of Ford back in 1989.
The American giant paid £1.6 billion for Jaguar, and since then has poured an estimated £4 billion into trying to bring it back to life. Now it’s starting to wonder if its pockets are deep enough to keep Jaguar going. Ford chairman William Clay Ford has hired a former Goldman Sachs banker, Kenneth Leet, to look at ‘strategic options’. But getting someone from Goldman to do that is like asking Savills what to do with your country house. They’re going to suggest, politely but persuasively, that you should sell it.
Right now, Jaguar’s future looks more uncertain than at any time since it was owned by British Leyland. Ford may package it with Land Rover to create an upmarket British car company that could tempt one of the other big auto giants — or a cash-rich private equity firm. Just as plausibly — rather like BMW’s sad attempt to save Rover — Ford could steadily lose interest, until the company is worth nothing.
It wasn’t hard to understand why Ford wanted Jaguar in the first place. It foresaw, accurately, that the mass market was going to be a crowded arena in which to compete in the next couple of decades. Margins would be squeezed. Profits would decline. Nobody would make money. So why not bring together the Jaguar brand with Ford’s manufacturing skills and the result would be an upmarket range of cars that didn’t cost much more to manufacture than a Mondeo? It sounded great — but it didn’t work.
Last year Jaguar sold just 89,904 cars, compared with a target when Ford bought the company of 200,000 a year (and compared with sales of 119,000 in 2004). Nor is there much prospect of an immediate upturn. In the US market, where more than half the cars from its two British fac-tories are destined, sales dropped by 15 per cent in the latest quarter. Hopes are pinned on the new S-Type mid-range saloon, due in 2008, and the first design mock-ups are stunning, but the car is going to have to be a big hit to have any chance of keeping sales even up to the 100,000 mark.
When Ford bought Jaguar, it took on two big problems: rotten reliability and rubbish productivity. One Ford executive famously remarked, when shown the Coventry factory, that it was the worst car plant he’d seen outside the Soviet Union. For a car maker, there are various words you’d like attached to your brand: power, success, style. But not ‘rust’. Unfortunately, ‘rusty’ and ‘Jag’ went together like ‘Chelsea’ and ‘tractor’.
With typical American efficiency, Ford has turned that around. Jaguar is now well up to the standards of its luxury rivals. The influential J.D. Power survey in the US this year ranked Jaguar the eighth most reliable car brand in the world, ahead of BMW and Mercedes and about level with Honda (Lexus came top). There isn’t much wrong with the factories either. Each Jaguar worker now makes 16 cars a year, compared with just 1.3 in British Leyland days. True, in the mass market workers churn out 100 cars a year each, but there is nothing shaming about the way Jaguars are made these days. Ironically, it turned out to be the brand — the one valuable asset that Ford thought it was acquiring — that was the problem. ‘They seemed to lose confidence in themselves,’ says Michael Wynn-Williams of the auto consultancy Trend Tracker. ‘They started raiding their own museum for inspiration. Those designs were inspiring back in the 1960s, but now they just evoke a rusty old Jag sitting in the shed.’
Sad but true. Jaguars still have the ability to turn heads, and the new XK sports coupe is beautiful by any standards. They aren’t, however, innovative cars any more. When models such as the Mark II, famously driven by Inspector Morse, or the E-Type were first produced, they were radically new, using technology developed for motor racing. By contrast, the curves of today’s S-Type and X-Type are deliberately retro. ‘Jaguar haven’t really shocked anyone or surprised anyone for a long time,’ says Wynn-Williams.
The comparison with the Conservative party is instructive. In effect, under Ford, Jaguar went for a ‘core vote’ strategy. Hard-core loyalists loved what they were doing. Everyone else was puzzled. As Michael Howard probably realises by now, flattering the faithful protects your base, but doesn’t win elections. And it’s no better as a cor-porate strategy than a political one.
In fairness, there are signs that Jaguar recognises the problem. It’s been doing a lot to shake up its image. It has provided free cars to ‘brand ambassadors’ such as Dylan Jones, editor of GQ magazine, and Vernon Kay, the Radio 1 DJ. Last year it hired a new ad agency, Euro RSCG, which put together a new campaign designed by Alicia Johnson, who has a background creating ads for fashion houses. With the slogan ‘Gorgeous’ and lots of blurry photographs, the ads are pitched at ladies who lunch, not traditional Jag drivers en route to the golf club.
It’s a start, but not enough. Glossy ads won’t turn the business around unless the product has changed. In reality, Jaguar needs to learn from the Cameroons. It needs to start surprising people again. Here are three ways it could do so.
First, make an SUV. For years Ford has been rather sniffily pointing out that it already makes an upmarket British SUV called Land Rover. Fair enough. But Chelsea is full of expensive Porsche, BMW and Lexus SUVs, and Jaguar can’t afford to be out of that market.
Next, make the sleekest, greenest hybrid anyone has ever seen. A tree-hugging Jag is about as plausible as a hoodie-hugging Tory. That’s why it would be great. Toyota has taken the lead in hybrid petrol/electric cars, but now Mercedes and BMW are teaming up to develop upmarket versions. Jaguar should crash in, producing a luxury vehicle that cruises around town on a battery.
Third, get some new designers. Jaguar’s chief designer, Ian Callum, produced a great car when he designed the Aston Martin DB7, but hasn’t found his groove at Jaguar. It has been companies such as Renault and BMW that have been innovating — so how about poaching Renault’s Patrick le Quement? The Megane might not tempt many Jaguar drivers but it’s a fresh design, and le Quement has helped turn what used to be a maker of cheap French run-arounds into such a successful business that mighty General Motors is begging to be allowed to merge with it. After all, if Arsene Wenger can turn dull Arsenal into the Premiership’s most stylish team, couldn’t another Frenchman do the same at Jagu ar?
Jaguar is far from a lost cause. The machinery is all in place. It has a great heritage to draw upon. Without a radical image overhaul, however, Jaguar isn’t going to survive. Perhaps they should persuade David Cameron to drive one — and reflect on the fact that he’d rather be seen on his bike.
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