Home / Future Cars / Jaguar's Joe Eberhardt on Brand Perception, Quality, the XE, and the XF
Jaguar's Joe Eberhardt on Brand Perception, Quality, the XE, and the XF
by Edward Loh September 11, 2015
"We're kind of at a crossroads for the brand," says Joe Eberhardt, Jaguar Land Rover North America CEO and president, " with the launch of four all-new products. And we've done a lot of internal soul searching. What do we have to do to get ourselves as prepared as possible to make the maximum use of that opportunity?"
We recently sat down with Eberhardt, who opened up about the XE and XF and explains Jaguar's attempt to overcome perception issues about the brand.
"Since Tata took over JLR in the last five years, we have more than doubled volume to 462,000 units last year. We have said, on the record, that we will, for the first time, cross the half-million mark for 2015. So more than doubled volume, five consecutive best-ever sales years. But the lion's share of that significant increase has come in the last couple of years from the Land Rover brand and Range Rover in particular.
"And that was because of the three all-new products that were launched—with Range Rover Sport, the Range Rover, and the Range Rover Evoque—that really drove the significant volume increase. We're now getting ready to build the Discovery family with the Discovery Sport being the first member, soon to be followed by the Discovery and then the third pillar in the Land Rover brand, the Defender.
"The majority of the growth so far has come from Land Rover, but that is about to change. Jaguar, not that it was not successful, but in overall volume terms, it is still a fairly small part of our business; 81,000 units out of the total 460,000 are Jaguar. So that was up slightly—for 2015 about 6 percent—and as such was our best performance in a decade, but in the overall competitive market, it is, dare I say, a niche player. "Really the focal point for us in North America over the next six to 12 months will be the launch of the next generation of Jaguar.
"And I think before we talk about the future product—just one step back—Jaguar has one of the most storied histories in the car business. Racing pedigree, racing success, some of the most beautiful cars with the C-, D-type, lightweight E-type, XK120, and Mk1 and Mk2. So really a history that was always focused not just on racing success but on performance, design, and all of that in a value package. I mean, William Lyons said, 'Pace, grace, and space.' That was one of the taglines. Another was, 'Fast, beautiful cars.' But it was always this combination of making a car that was performance-oriented, that looks pretty, that is sort of affordable.
"And with that brand DNA we think we really have something that we can continue to build the brand on and evolve further. So that process started in '09 with the XF, XJ, and the XK. But really, up until today, we were a three-car brand, three model lines that as we know today are somewhat limited in size, especially as of late are under severe pressure from an overall line perspective because of the SUV growth in particular.
"Going forward, we will replace those three model lines with all-new platforms and all-new vehicles. So the XF comes on an all-new aluminum-intensive platform replacing the outgoing XF. The XJ will be updated both from a design and engine/performance perspective. And then the F-Type replaced the XK as really the new icon—the heart and soul of the Jaguar brands.
"We will basically replace our core product lineup. We have added significant features that are just needed to compete in North America, such as all-wheel drive. And then our first, all-new engine line, with the Ingenium engine family.
"But that transformation really all started with the new F-Type. As I said, we think of it as the heart and soul and DNA of the brand going forward.
"We are about to launch the XF, the XE, and then shortly thereafter the F-Pace. And when you look at the cars, they do have a common design, appearance, theme. And that is intentional. In this business it's always a question of do you have each model stand on its own with a new design language, or do you try to build some sort cohesive appeal and resemblance (almost). We think at this point in time for Jaguar that it is important we build this family resemblance because we have the advantage of small size. In a way, it's a disadvantage, but also an advantage. We're not at every street corner; not everybody knows what a Jag looks like or is familiar with it. So we really want to, on purpose, drive that design language, to start building that familiarity with the brand.
"So I think from a product portfolio perspective I should go back.
"The XF and XE because they compete in segments that drive volume—just by entering those segments we literally triple the accessible markets for the brand. So I think we have the product portfolio, and strategically we are going in the right direction. However, when we look at how we maximize the opportunity, we found that there are two, potentially three issues that are to be overcome. Those are issues that are true and key for every luxury brand, but they are of particular importance for us because of our history and our small scale.
"And the first reason for customers to reject a luxury product is the value or the price. That's true for any brand, but it's true in particular for us. If we're honest and if we go back, we always priced our products at the top of the segment in each of the market segments that we competed [in]. We will change that going forward and price and target each Jag entry at the heart of the particular segment. We do that with three approaches:
"We change the way we design the lineup of our options. So we'll have a good/better/best strategy—nothing revolutionary, but new for us. So we'll reduce the number of standalone options. We'll have an entry-level product and then some logical price steps through option packages that walk customers up from there. We will have lower MSRPs. We actually will lower the retail price between close to $2,000 and $4,000 for most of the model lines. And we will have new entry price derivatives that will help communicate the value proposition of Jaguar. And then, as I mentioned before, with XE and F-Pace we will add a whole new dimension of pricing perspective to our lineup just by the nature of the segments they compete in.
"From a pricing perspective, and I think that is key, we will launch the XE at below $35,000. And that puts it exactly at the heart of the market, actually below its direct competitors, the Mercedes-Benz C-Class, Audi A4, Lexus IS, and so on. The only exception really is the BMW 3 Series, which is slightly below, but that is not a completely fair comparison, because they did that as a countermove to the CLA, not the C-Class, and they really did reduce the number of options on the car—it's basically a stripped-down vehicle, as you know.
MT: So you have perception problem; Jaguar looks too expensive and exclusive, in part because of low sales volume?
It's fundamentally a problem for the luxury segment—all the brands. But more so for us. We did a deep dive with our own customers and prospects, and the perception [of Jaguar] is that you're very exclusive, you're niche, and as such, you have to be much more expensive than everyone else. In a way it's a good problem to have because people think of us as being exclusive and expensive—premium—but if you can then put it within reach, it will help translate that aspiration into actual sales. We had some verbatim reactions. 'You're an $80,000 car, you're a $70,000 car,' even for the XF. So to put that in front of customers that, yes, you can get into an XE at below $40K or an XF at below $50K is absolutely key for us.
"So the XF, all-new car, coming to market at the end of this year, with the aluminum architecture it's about 265 pounds lighter than the outgoing model. Similar proportions, increased wheelbase that lines up much better—rear legroom, kneeroom, and headroom. Initially available with two engines: 340- and 380-horsepower V-6. We will get, shortly thereafter, four cylinders, both gas and diesel, as well. And it will have the all-new InControl Touch Pro infotainment system.
Model year '16, we will reprice the XF to $51,900 in the V-6 configuration. And that is about 10 percent lower than the lowest-priced V-6 from model year '15. And we didn't do that by just stripping it clean and reducing options. It's really a very nicely equipped car at around $51K, and as you can see, it compares very favorably to our German competitors in particular.
And then, as I said, once we have the four-cylinder diesel and gas, we'll drop that below $50K for the XF.
MT: The guy who buys the model year 2015 XF is not going to be super excited about having a heavier car that is more expensive.
"Clearly, short-term there are some issues. And we are thinking through what we can do from an owner relations perspective to get them over that. It does, in the very short term, have an impact on residuals, which we are trying to turn into a positive the way we package the options together. So we work with ALG and we will actually see some residual improvements as opposed to reductions, which is key and important.
"And then the XJ: exterior and interior fresh, significant upgrades on the feature and options side. The standard wheelbase will be a lot more dynamic and aggressive. And then the long wheelbase gets a different interior treatment, much more luxuriously oriented. On that car we will not reduce the price. We will increase the standard equipment by about 10 percent or about $7,000. Some of the equipment that will be added—LED adaptive headlights, ventilated rear seats—is all stuff that the competition charges separately for that we will charge standard in the car.
"And then all of this really started with the F-Type for model year '16 where we went from—when the car was launched—one model lineup. It's now 12 variants that are available, from the V-6 AWD, the manual, all the way up to the R Coupe. All-wheel drive is now standard on the R and S models. And the convertible got the same 550-horsepower, supercharged V-8 known from the R Coupe.
"Again, similarly to the XJ, we're not reducing price. We're adding between $4,000 and $12,000 of standard equipment without raising the price. As a result, the competitive positioning is significantly improved with the F-Type Coupe at $74K and the Cayman S at $85K. And the R Coupe at $107K and the 911 Carrera S at about $131K. So the entry price of the F-Type is about $61K, and it goes all the way up to $106K. We'll continue to keep making changes to that car to keep it fresh because it really has from the day that it was launched been a tremendous success. We continue to gain market share, but we know we cannot stand still. We have to continuously add and keep the car fresh and exciting.
"So with that, we'll get a lineup for '16 and '17 model year that really is fundamentally changed from what it was, three traditional core models—XF, XJ, and F-Type—at the center. And then the large volume models XE and F-Pace, which we think next year will be about 60 percent of our total volume, just between those two models.
"F-Pace will follow a similar pricing strategy, so we will have an entry-level car at a very competitive and aggressive price, which will be released in three weeks' time.
"So we think we've got the product box ticked, pricing hopefully sorted, which leaves us with one remaining purchase barrier: rejection reason. And that is the cost of maintenance and repair. And the reputation for quality or lack thereof, which is unfortunate because factually our quality is one of the best if not best in class, as evidenced by JD Power over last six years, where we had one or two or at least podium finish in every one of the quality studies, whether it was IQS (Initial Quality Study) or VDS (Vehicle Dependability Study), sales satisfaction, CSI, APEAL—you name it, Jag was on the podium.
"I think we probably haven't used that too much, but I think we're the best-performing JD Power customer satisfaction and quality brand in the business—at least over that length of time. Clearly there is a mismatch or a misalignment between the actual quality and the perception. Which, you know, goes back to the historical issues we had.
"Nevertheless, it is a reality. Perception is reality, so we have to deal with this. We can hold up those results all day long, but look, it wouldn't make a difference. So as a result, we have decided in model year '16 to launch the best-in-class, best-in-segment assurance package and ownership coverage. We will have five-year, 60,000-miles complimentary scheduled maintenance, the new-vehicle warranty aligned with that time frame, roadside assistance and InControl Remote and Protect, our telematics platform standard and included. And that really is best in class compared to all of our European and domestic luxury-brand competitors. They all have elements of it; BMW has had scheduled maintenance for quite some time. But it's for four years/50,000 miles as opposed to our five-year/60,000 miles.
"So a very comprehensive package. We think that is needed to take that last potential purchase rejection away."
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