Over the weekend there was an article in the FT that stood out to me, “Failed bets knock Jaguar Land Rover off road” Campbell, P. (9th February 2019) FT Weekend, p.16.
The key takeaway points from the article for me were;
- Jaguar Land Rover (JLR) just wrote down £3.1bn (c. 1/3 of the company’s value)
- Hurt by high exposure to diesel and slowdown in China
- Diversification has led to three brands vying for the same customers
- JLR is cannibalising market share with the introduction of new models
Intrigued by the article I decided to consider how much crossover there was in the marketplace. Searching on Autotrader for 2019 models (mostly physical, nearly new cars with under 1,000 miles) I looked at the highest and lowest prices of each model, ignoring published list prices, which are often discounted, leads to the below figure:
The two companies seem to be competing internally instead of taking a cohesive view as a group; not only that, Jaguar models also seem to be cannibalising other Jaguar models. Starting with the smaller saloons, the XE and the XF both can be bought for £27,000 (XE – 2019, 849 miles, £26,570 & XF – 2019, 456 miles, £27,250), so what’s the difference? According to Jaguar;
“The real design difference between XE and XF comes down to one simple thing – size…XF is 28cm longer and is 4cm taller than XE”
So…28cm. Each model racked up just under 11,000 units each in Europe in 2018. For comparison, BMW sold just under 107,000 units of the 3-Series and 109,000 of the 5-Series in the same period.
The same pattern of two Jaguar models in the same market continues with the E-Pace and F-Pace SUVs, but here Land Rover also get caught in the crossfire as the models also compete broadly in the same price category as the Discovery Sport and Range Rover Evoque.
It would appear that the model line-up will be trimmed back to prevent to problem continuing, but which path should JLR follow?
I’d start with Land Rover; Tata have continued to squeeze all the juice they could possibly get out of the Range Rover brand with the Evoque and Velar and could risk taking it too far, so I would get rid of those first.
The Evoque has proved to be a popular model, but there is already a small SUV in the shape of the Discovery Sport which shares the D8 platform with the Evoque which could fill that sector of the market, albeit without the premium Range Rover brand attached to it. The Velar almost matches the price band of the Discovery exactly and while the sales have been strong, Disco sales have fallen as a result.
That would leave a Land Rover line-up of Discovery Sport, Discovery, Range Rover Sport and Range Rover with a range from £36,000 to £145,000. This would cement the Range Rover brand as a premium product with a minimum buy in of £64,000, double the entry point to the brand with the existing Evoque, and would leave the Discovery brand for the wider market. The new Defender is also due to join the stable in 2020.
At Jaguar, XE and E-Pace models would go as they aren’t sufficiently differentiated from the XF and F-Pace.
The XF, with its saloon and estate options caters to a wide part of the market. It shares the same platform and engines as the F-Pace so it makes sense to keep that too, especially as it also bridges the gap in entry points between the Discovery Sport and full-size Discovery.
From here onwards, it is a bit murky for Jaguar. I really enjoy Seth Godin’s example for highlighting the differences between a brand and a logo; if Nike opened a hotel most people could imagine what it would look and feel like – if Hyatt came out with a pair of trainers most people wouldn’t know what to expect because Hyatt doesn’t have a brand, it has a logo. That’s exactly how I feel about Land Rover vs. Jaguar.
If Range Rover opened a hotel it would probably look like Soho Farmhouse. If Jaguar opened one, I wouldn’t know what to expect apart from the fact that it would probably be empty.
It is such a shame, the brand that brought us the E-Type, XK120, XKSS, XJ220, XJ6 and Mark 2 just feels lost from the outside looking in, the Mary Celeste of car manufacturers. The flagship Jaguar model, the XJ, sold 1099 units in Europe in 2018. The Lada Vesta sold 1296 and I’m not even sure what that is. The F-Type, the only sports car within the group, clocked up just over 4,000 units.
Jaguar have had good success with the I-Pace, the first all-electric vehicle. At this point Jaguar may as well go all-in on the EV bandwagon and create electric F-Type and XJ models alongside the I-Pace. Jaguar could then take the battle to Tesla in the EV market and put a stake in the ground declaring them as their main competition. This would frame the company in a completely different light and allow them to navigate away from crowded markets and position itself alongside Tesla, a brand which undoubtedly has more relevance to younger buyers.
With a slimmed down Land Rover model range and an electric-first future strategy for Jaguar I think that JLR would have a chance of successfully navigating the choppy waters that it currently finds itself in and I will be watching with interest as the next few months unfold.