Sep 9, 2014

Jaguar’s Cheapest Sedan Targets Less Rich in Volume Push


Jaguar is introducing a new entry-level sedan, challenging Bayerische Motoren Werke AG (BMW)’s most popular model, as part of a push by the upscale British brand to triple sales by building vehicles more people can afford.

The XE saloon, as the car style is known in the U.K., will be Jaguar’s cheapest vehicle at 27,000 pounds ($44,000) when it goes on sale next year to rival the likes of the BMW 3-Series. The car is a critical test of Jaguar’s ability to compete in the biggest part of the luxury-car market after halting production of the similarly positioned X-Type last decade because of disappointing sales.

The car “represents a bet-the-house gamble,” said Max Warburton, an analyst at Sanford C. Bernstein Ltd. in Singapore. “The XE launches into what is arguably the most competitive premium segment of all,” and rivals including the 3-Series, Audi A4 and Mercedes C-Class have “far greater scale advantages.”

The mid-sized model, which was unveiled today in London, is part of a record spending spree by Jaguar Land Rover, the luxury-car maker owned by India’s Tata Motors Ltd. (TTMT) The Whitley, England-based company is investing 3.5 billion pounds in the year through March to broaden its lineup amid stiffening competition.

Fiat SpA (F)’s Maserati is encroaching on Jaguar’s turf with the $66,900 Maserati Ghibli, and Volkswagen AG (VOW)’s British ultra-luxury brand Bentley will challenge Land Rover when it rolls out its first sport-utility vehicle in 2016.

Kaiser Chiefs“The XE is unbelievably important,” Ralf Speth, Jaguar Land Rover’s chief executive officer, said to reporters today. With its more affordable price tag, “we’ll have an opportunity to bring younger customers, to bring female customers into the range of Jaguar.”

For the star-studded premiere, Jaguar recruited British singer Emeli Sande and rock band Kaiser Chiefs, while rehearsals for the show included the XE dangling from a helicopter over central London.

The XE will be the first model to be built on Jaguar’s new lightweight aluminum frame developed to improve performance as the brand seeks to revive the sporty image of its heyday in the 1960s, when movie stars like Steve McQueen and Brigitte Bardot favored the E-Type sports car. The new Jaguar, powered by a four-cylinder gasoline or diesel engine, will be priced on a par with the BMW 3-Series, which costs between 23,550 pounds to 45,515 pounds in the U.K.


IPad Generation

With the XE, “they’re really making an exciting sports saloon, as Jaguar used to,” Graham Searle, general manager of the Jaguar Enthusiasts’ Club, said by phone from Bristol, England. Unlike the older clientele of its pricier models, the new sedan is “aimed at the iPad generation.”

Jaguar’s effort to bolster the XE’s appeal includes the ability to control doors, temperature and even start the engine remotely via a mobile device. The infotainment system features an eight-inch (20 centimeter) touch screen and allows connection to the driver’s smartphone apps, using optional voice control.

XE sales are forecast to peak at 63,700 cars in 2016, which approaches the brand’s 2013 global deliveries of 74,500, according to market-research company IHS Automotive. Flanked by other new Jaguars, sales are set to rise to about 230,000 cars by 2018. Still, that pales in comparison with the 2 million cars that Munich-based BMW expects to sell this year.

Speth conceded that the XE’s profitability might lag margins of equivalent models at the three German luxury carmakers because it’s “clear that we don’t have the economies of scale.”

Jaguar is hoping its sporty heritage, which has been shored up by the 51,250-pound F-Type sports car, helps it woo buyers away from BMW, Audi and Mercedes. For the British brand, the XE is more about joining, rather than beating, the competition.

“There’s space enough, room enough in this segment for everybody to make a business,” said Speth.

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