ANDY VINE: I don't think you ever want to commit away from sedans. Those are core products with a huge following around the world. I think we are doing the right things by moving into a new market segments. But the market can flip and you've got to be positioned for whatever transition takes place. I think the exciting thing is some form of electrification coming by 2020 will make Jaguar quite a franchise and put it out in front of other brands. We're excited about SUVs, but also what's coming on the sedan side.
The market may be filling up with SUVs and crossovers, sales may have plateaued and the economy might be cooling. But none of that worries most Jaguar and Land Rover dealers.
Fresh off record Land Rover sales in 2017 and another solid year of growth for Jaguar, 2018 brings more new products, including low-production, high-performance vehicles.
Specialty models, such as the Evoque convertible and XF Sportbrake wagon, are becoming a larger part of JLR's business. And this fall, when the battery-powered I-Pace crossover arrives, Jaguar will become the first mainstream luxury brand to take on Tesla's Model X.
Andy Vine, 55, chairman of the Jaguar Land Rover Retailer Cabinet, says the British brands' dealers are generally happy and most have agreed to improve their stores to JLR's new Arch design standards that house both brands in separate showrooms under the same roof.
Vine, dealer principal at Jaguar Louisville and Land Rover Louisville in Kentucky, spoke with Staff Reporter Richard Truett.
Q: It has been 10 years since the formation of Jaguar Land Rover after Ford Motor Co. sold the brands to India's Tata Motors. How is the business today and how have things changed under Tata?
A: JLR presently is in a great place. Profits are good. JLR is continuing to reinvest in new products, including hybrid powertrains for Range Rover and Range Rover Sport and the fully electric Jaguar I-Pace coming out this summer and fall. As we look back on 2008, Jaguar had three models — the XJ, XF and XK. If we fast-forward to now, in addition to XJ and XF, we have F-Type, XE, two SUVs on the ground and a third coming. On the Land Rover side, we had Range Rover and Range Rover Sport and LR2 and LR3. Now we have new versions of the Range Rover and Range Rover Sport, and we'll have hybrids of those, and the new Discovery and Discovery Sport, the Evoque and Velar, which has become the most popular model across both brands. And JLR has committed to launching electric or electrified options in all its vehicles by 2020. So it's a pretty exciting time for JLR dealers and for the manufacturer.
Did JLR dealers foresee this kind of product cadence?
Some of us who were involved in the dealer council saw some of this coming. I think all dealers are excited about where we are, especially in the transition from sedans to SUVs. JLR could not have put together a better game plan or be in a better place than it is right now.
In the last decade, have there been any problems that were not handled or resolved as well as dealers would have liked? Delivering class-leading quality, for instance, has been a challenge for both brands.
I think JLR has made fantastic quality improvements, especially when I think about engines and transmissions. JLR, in developing its own infotainment systems, made a step into trying to control data and not give it to outside suppliers that U.S. dealers are not crazy about. But JLR has made adjustments and I think they'll get it corrected. Actually, quality continues to improve and we've seen steady improvements.
Though the surveys may not show it yet, are JLR's newest vehicles competitive with Mercedes-Benz and Lexus and the other brands that are considered leaders in quality?
Yes. I think we really have a whole new brand that has come on with SVR and they will take quality to another level — the Range Rover SVAutobiography and SVAutobiography Dynamic, Sport SVR and Discovery SVX that is coming with a V-8. The F-Type SVR is a real showstopper.
Tata in 2008 brought stability of ownership to Jaguar and Land Rover. Because of that, are dealers now more apt to take a fresh look at the Arch requirements that combine the brands under one roof?
From a dealer's standpoint, no one likes to spend a bunch of money on facilities. We had some initial resistance from the dealer body, but most of that has settled down. It's important to note that for the last five years, JLR dealers have been blessed with a product onslaught that has brought probably the best return on investment in the industry for U.S. and Canadian dealers. So, as much as everybody hates to reinvest, I think everyone has come to grips and resistance has really died down. Now, it's full steam ahead on Arch. For the Canadian dealers, I think all of their Arch facilities will be done within the next 18 to 24 months. For the U.S., I think there are over 100 dealers who are converting in the next 18 to 24 months.
Has JLR been flexible in addressing dealers' concerns over Arch?
The council has been heavily involved with the team in North America to continually drive down the cost of Arch. We've gotten some really good results in helping to control costs. In my store, my partners and I will have a new Arch facility started in the next 30 to 60 days. There are a bunch of them already open in North America.
Based on early feedback, how well are dealers who have opened Arch stores doing?
Most of the operators we have talked to have been very excited about the way the consumer has reacted to the new design. The important thing to note is the North American design for the dual branded facility is unique to North America. You have a parent company that has invested billions in new product. As much as they have committed, we understand as a dealer body that it is our turn to do the same.
Does JLR do a good job addressing dealers' concerns? For instance, some dealers have sued because they believe their area of responsibility is unfair. And others have resisted Arch.
JLR has been very open to listen. And when it makes good business sense for both of us, then yes. When you talk about those big issues, such as Arch, those things are really mandated from JLR's global team. I think it is the right move for us to have a consistent [dealership] design. They were very open to having us involved. Putting a team of dealers together allowed us to work with their team to drag down North American costs. A lot of what goes on in North America, when it comes to zoning in cities, is unique.
A few JLR dealers have been unhappy about their areas of responsibility that are created by Urban Science. Many dealers of other brands I have spoken to say they don't understand the methodology Urban Science uses to determine each dealer's marketing area. Does JLR need to take a closer look at this process?
You are going to pick some source that will give you your market, whether it is Urban Science or someone else. I think they're probably as good as many resources we could use. I really don't have an issue. I look back at how the Land Rover brand was built. We had a large territory that we were responsible for. Even today, if you are not in a metro area, you have a big area of responsibility. I think that is partially what makes Land Rover successful. We take care of our markets. And that is kind of the foundation we are built on.
With the record number of nameplates in both showrooms, are dealers looking for JLR to step up its marketing and advertising efforts to support them?
I think what is important with the nameplates we have now or the ones coming, all dealers always think we could use more advertising dollars. And when you become a cabinet member, you realize that regardless of the number of nameplates, there is a finite budget. Our head of marketing, Kim McCullough, is doing a really effective job stretching the budget to have a great impact on social media and raising awareness even before the product is released. The F-Pace and E-Pace have had incredible launches. Kim has really helped U.S. dealers with the content of commercials and providing assets that make a whole lot of sense to the North American market and dealers.
The shift from sedans to SUVs has disrupted the market for traditional brands such as Jaguar. Has JLR done the best it can providing dealers with enough units of the F-Pace, and lease deals on the sedans and F-Type sports car?
Definitely. The team in Mahwah (JLR's headquarters in New Jersey) has been very responsible in helping us adjust the business to market realities, with a lot of input from the dealer council. I think XE, XF and XJ are still very important models to Jaguar's core customers. More importantly this year on the Jaguar side, we're launching our second and third SUVs, but we will also have very competitive deals for the sedans. On the Land Rover side, it's the only premium luxury SUV brand for the second year in a row to set another all-time sales record in North America with more than 75,000 vehicles sold in 2017. Jaguar was in '17 one of the fastest growing luxury brands.
It looks like the E-Pace compact crossover will continue Jaguar's momentum. How do dealers feel about selling a smaller, less expensive Jaguar utility vehicle?
I think sales of E-Pace around the world will be a huge help for the Jaguar brand. During our visit to the Magna Steyr plant in Austria (where E-Pace is built under contract), the dealers were overly impressed at the quality of vehicles coming down the line. We did some serious deep dives into how they are stacking up and we were very impressed. If we can sell them and need more volume, Magna can definitely produce. We also got to drive the vehicle in Austria and it felt like a true fantastic performing Jaguar SUV. So we are excited about that product, especially when the volume ramps up and we get to a point when we can show what North American dealers can do. We've done a great job on F-Pace and I know all dealers are excited about what we can do with E-Pace. It is positioned at a great price point with a great package.
A new Defender is coming, but where does Land Rover go from there? The lineup seems full. Does the Range Rover brand go smaller than Evoque and bigger and more opulent than Range Rover?
As far as sizewise going smaller, I can't comment on what JLR has coming. I don't know of anything. It's really up to JLR to decide how much they can go below that. E-Pace, Evoque and Discovery Sport have gone downmarket, but to a good place. And I am really excited about what we have right now. The Velar is selling really well. The Discovery Sport is really gaining great sales momentum for the brand. As far as going upmarket and stretching, there probably is some opportunity. We are seeing that with SVAutobiography and SVR versions. They will stretch and it will be exciting.
What vehicles would dealers like from JLR?
Nothing more than what we already know about. We have got an unbelievable lineup of vehicles. We are in a very happy place right now.
We're seeing JLR launch some niche vehicles — the high-performance and bespoke Land Rover SVAutobiography models and Jaguar SVR models as well as the Evoque convertible and XF Sportbrake wagon. Are these vehicles tough to sell?
They are very, very low volume. And for the number of units JLR is bringing to America, there is plenty of market. To the surprise of many people, we do incredible with the Evoque convertible. There have been some convertible SUVs, but I don't think anyone has brought over the right number. I think JLR is doing a great job of limiting the volume. Same thing with Sportbrake. A lot of U.S. travelers go to Europe and Sportbrake is a very well known product in Europe. We've got some excited customers seeing Sportbrake. The Audi Allroad has always done well and we can bring great competition to that car with the Sportbrake.
Are JLR dealers getting enough of the proper inventory?
We're coming off a year of great sales. JLR North America has ambitious plans for 2018 on the Land Rover side. As a council we've been enlightened toward those numbers with the adjustments of the car side to the SUV side. They really got the mix correct. I think most all North American dealers will be excited at the volume of inventory that will come to them in 2018. When we talk about the mix, we still spec out our own cars.
Has Elite Care, which basically covers maintenance for the first five years, resonated with consumers?
It is so exciting when you can show great products with great quality and then be able to market the best warranty in the industry. On the Jaguar side having a five-year warranty that includes maintenance is a winning combination. You saw that with how well we did with F-Pace. That's the first product we've seen on the Jaguar side where the majority of customers came from other brands. When you can show them Elite Care, it gives you a competitive advantage.
Overall, are JLR dealers satisfied with the way the business is run?
As a whole, JLR dealers are extremely happy with industry leading return on sales. And with the expanded lineups of vehicles on the ground or coming, they are in a very, very good place, a healthy place. We continue to push the manufacturer and ourselves to be better in all aspects of the business; we really get the big picture.
And we are extremely happy with Tata's investments in products and powertrains and the idea of having fully electric powertrains. If you look back to 2008, we were having a hard time getting all-wheel drive on the XJ and other Jag models. Now, think where we are today. Anything we need, JLR is on the forefront getting those products to us. It is a changing time and an exciting time. I think JLR dealers are very happy with the value of their franchises.
