British marque moves away from cut-price models to concentrate on profit.
11 June 2005

Jaguar is planning to reposition itself with a new range of highly profitable, low-volume models to make it Britain’s equivalent to Porsche.

The plan will roll out over the next five years as the new XK and S-type arrive and a replacement for the X-type is decided on. It is unlikely that Jaguar will invest in another entry-level luxury saloon, a highly competitive market where profits are tight. ‘We want to get away from selling cars in markets where incentives and support are needed,’ said a spokesperson. ‘It affects residual values and image.’ Jaguar won’t repeat the mistake of the X-type. Although it is now profitable in Europe, it is not in the US and has only sold half of the 100,000 planned.

Most likely is a Porsche Cayenne rival to replace the X-type as Jaguar’s fourth model line. But a supercar or £80,000 four-seat luxury coupé must also be possibilities, and a decision is likely to be made in the next 12 months.

A Jaguar 4x4 could retail for between £40k and £70k and sell 25,000 units a year, half that of the X-type, but it would be much more profitable. ‘A Cayenne-type 4x4 is the sort of car that Jaguar could do,’ said a senior engineer, ‘one that’s focused on performance and handling more than off-road ability.’ This is a distinction that would position a Jaguar 4x4 away from the Range Rover, whose off-road capabilities compromise handling.

Plans for a less expensive crossover based on the next Land Rover Freelander are now on the back burner. Such a strategy could cut Jag’s production to below 100,000 units, from today’s 115,000. But selling fewer, more profitable models is part of the plan. Porsche, for example, is the world’s most profitable car-maker by margin, making nearly £10,000 on each of the 81,531 cars it built last year. The Cayenne makes up half of Porsche’s production.

The new alloy-bodied XK, for example, is understood to be highly profitable at 10,000 units a year. If the car is as popular as the outgoing model, which hit 12,000 sales in 1997/8, the XK will be a success for Jaguar.

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