Cheapest Jags get kicked to the curb
By James R. Healey, USA TODAY
The X-Type 2.5 will be gone soon.
NEW YORK — Money-losing Jaguar is killing the cheapest versions of its entry-level X-Type sedan and adding more-expensive X-Types and a $115,000, high-power XJ sedan to regain an image of exclusivity and the profit it hopes that brings.
Jag's move shows that European luxury brands can go too far downscale, or use the wrong products when they do.
BMW moved down-market in the 1990s, but by 1999 had dumped the very cheapest, four-cylinder versions of its 3 Series entry cars because they conflicted with the brand's high-performance image.
Mercedes-Benz sells a relatively low-price, lower-power C-Class lineup, starting with the $27,000, four-cylinder C230. C-Class is Mercedes-Benz's biggest seller in the USA, but C-Class sales are down 29% the first two months this year, according to Autodata.
Jaguar has not only killed the $31,000 2.5 X-Types, but is reducing incentives on 3.0 X-Types. That leaves more money to promote higher-price cars, but it has also helped cut X-Type sales, down 20% this year.
"We're quite deliberately spending far less on incentive marketing for the X-Type than we have been spending, and far less than the competition," says Mike O'Driscoll, head of Jaguar's U.S. operations.
O'Driscoll won't call the moves a phaseout of the X, but says that Jaguar is "looking at our options."
The $46,000 S-Type, next up the ladder from the X-type, seems vulnerable, too. Sales are off more than 20% in a new-vehicle market up 1%, Autodata says. "XK and XJ are the models you think of when you think of Jaguar," O'Driscoll notes. Those are $62,000 and up.
The shift back upscale calls into question Jaguar's 6-year-old strategy of offering cheaper, smaller cars to quadruple worldwide sales to 200,000 a year.
Jag lost roughly $700 million last year as a sales slump meant too little money to pay the overhead on capacity to build so many cars. Jaguar is expected to report a loss this year, says owner Ford Motor. It will shut a U.K. factory in June and lay off 1,150 workers.
Ford CEO Bill Ford has called Jag "a financial dog." He says the expansion plan, begun before he became CEO in 2001, was wrong: "I think that brand is an exclusive brand that doesn't lend itself to big volumes."
Some analysts say that Jag chose the wrong car. Purists consider the X-Type a disguised Ford Mondeo. "It looks like a Ford. It feels like a Ford. Why did they do that?" says auto con******t Michael Maziasz at Michigan-based Maziasz Consulting Services.
"The X-Type wasn't a bad idea; it was bad execution," says Eric Noble, president of California-based con******ts CarLab. He thinks Jag needs an entry model, "but they need to do it right."
Contributing: Sharon Silke Carty
Linear Mode
