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Old 09-01-2003, 08:47   #1 (permalink)
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North America:Faced with lagging sales, Jaguar marks down X-Type

By MARK RECHTIN | Automotive News

Faced with lagging sales of its entry-luxury X-Type, Jaguar Cars North America will slash the price of the 3.0-liter model for the 2004 model year.
Jaguar will cut the sticker price of the upper-level X-Type 3.0 to $33,995 from $36,970, including destination charges.

In addition, the base X-Type 3.0 has added as standard a power moonroof, automatic headlamps, split folding rear seat, a wood-and-leather steering wheel, another cupholder and two extra audio speakers, which Jaguar values at $2,225.

The 2.5-liter model will remain at $29,995, including destination charges. There are no changes in the basic content of that car.

No change in dealer discount The price reduction will have no impact on the dealer discount, says Richard Beattie, executive vice president of sales and marketing for Jaguar and Land Rover North America. He hopes the 2004 X-Type 3.0 will account for about 75 percent of X-Type sales. It now accounts for about 25 percent. "The feedback we were getting was stronger for the 3-liter than the 2.5. We needed to reposition the vehicle in the heart of the segment," Beattie says, noting that the typical entry-luxury segment transaction price is between $33,000 and $34,000. The 3.0-liter X-Type will offer 227 hp and all-wheel drive, compared with the similarly priced BMW 325i, which has rear drive and 184 hp, and the Mercedes-Benz C240, which has rear drive and 168 hp, Beattie says. Despite the price cut, Jaguar will continue incentives, offering a competitive lease for both the 2.5-liter and 3.0-liter versions, Beattie says. "We will be focusing more on value and product attributes of the 3-liter," he says. "We also are dramatically reducing the number of build combinations, so there is less ordering complexity from the dealer point of view." The X-Type could use a sales boost. Through July, X-Type sales were 14,491 units, off 32.3 percent from last year. For comparison, BMW 325 sales were 45,826 units through July, up 9 percent. Mercedes-Benz C-class sales were 40,092, up 5.3 percent. Overall Jaguar sales were down 21.0 percent to 29,824. Lower residuals Slashing prices usually brings lower residual values of previous model-year vehicles, Beattie says. He notes that Jaguar has set aside some incentive funds to help dealers move used X-Types off their lots. Raj Sundaram, president of Automotive Lease Guide in Santa Barbara, Calif., thinks the repositioning is "the right thing to do because the 3-liter already had between $5,000 and $6,000 of lease subvention on it. "There is nothing worse than being perceived at a high price and also at a high discount," Sundaram says. As a result of Jaguar's price reduction, ALG has increased the forecasted residual on the 3.0-liter X-Type, to 49 percent of original value after 36 months, up from 46 percent, Sundaram said. Other luxury automakers have tried this tactic in the past. Infiniti recalculated its pricing in the middle of a product cycle in the late 1990s and saw incentive spending decline, though customers still wanted to haggle. Sundaram says Mercedes-Benz slashed the price of the S class when it was redesigned and also cut the dealer margin, thus improving the transaction price of the car.
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