Fleet News

Face-to-face: James Drake-Lee, Jaguar

FOR a company accused of conservatism which would make the more trenchant readers of the Daily Mail seem like adrenaline junkies, Jaguar really is on a rollercoaster of a ride.

Over the past few years it has struggled to sell key models in major markets such as the USA, closed the factory at its spiritual home in Coventry, been so late on the bandwagon of new, profitable market trends that rivals have played their tunes, packed up their instruments and gone home, and struggled to find a design language which reflects the ‘Britishness’ of today rather than the 1950s.

Yet, for all the headlines and doom-mongerers, Jaguar has launched an entirely new model in the X-type, managed the introduction of diesel engines which once looked like an anathema to the brand, and the XJ saloon is the UK’s best-selling luxury car.

Even with an ageing grand tourer in the shape of the XK, the groundswell of affection for Jaguar in the UK remains a huge, if relatively untapped market. And in the past four years, the firm has steadily grown its share of sales in the corporate market from a base of next to nothing.

According to corporate operations manager James Drake-Lee, product and infrastructure has been key.

He said: ‘When I joined Jaguar in 2000, corporate sales were about 10% of the total mix, whereas now it is running in the mid-40s. The difference now is the cars are more appealing and we’re getting the message across.’

Much of that increase is down to the introduction of the X-type but again, as seems to be a recurring theme for Jaguar, it has not been smooth progress. Sales of the small saloon are not what were originally expected and it has come in for criticism for sharing parts from parent company Ford’s empire – illustrating the haughty nature of the premium market.

But with the diesel model, finally introduced in 2003, Jaguar got rid of a couple of demons. For one, it was the first Jag to be powered by a fuel the firm had steadfastly resisted, and secondly gave it a foothold in a corporate market becoming increasingly infatuated with derv.

From the start, the X-type 2.0D easily outsold the petrol models, to the point where three-quarters of X-types sold are diesel, but Drake-Lee sees the steep upward line finally starting to flatten out thanks to changes in the company car tax system from January next year when all new diesels, whether Euro IV or not, will pay the 3% surcharge.

It’s a fairly pragmatic attitude, but after years of ups and downs, it’s a commonsense approach which is more likely to reap dividends in the fleet market.

There is some work to do to achieve the same success in total sales this year, though. At the end of May, year-to-date sales were down by 25% to 11,000 from nearly 15,000, with fleet accounting for an increased share of around half.

While the retail market has dropped off for Jaguar as it has for many manufacturers, it is the fleet business which is holding it up.

Drake-Lee added: ‘There are a lot of challenges in the next 12 months. The tax regime will change and this will cause a blip in the market because cars registered on December 31 will cost less in tax than a car registered on January 1.

‘An X-type diesel will cost £750-£800 extra in tax. I see there being a distortion in the market. While diesel will remain the driving force in the corporate market, its dominance will subside and petrol will come back a little.

‘We’re finding it hard to educate customers about the difference between Euro III and Euro IV diesels. Add in the change in legislation and customers who are just getting into ‘diesel good, petrol bad’ now have got to go back and learn that diesel is still pretty good, but petrol is not as bad as they think it is.

‘You can appreciate that drivers get lost in it, so that’s going to be a big challenge. ‘This is one of the reasons we’re setting out our sales plan this year to be flat because actually the market is not going to be there to take the growth. Our game is to try to do the same amount of business with more profit.’

Certainly the new diesels will help. The X-type will get the high performance 160bhp 2.2-litre diesel already in the Mondeo, while the XJ will finally have a diesel engine, using the same 2.7-litre twin-turbo unit as found in the S-type.

This is a real opportunity for Jaguar and Drake-Lee reckons the gloves are off. He said: ‘The sector is in trouble. Only two cars are really selling – the petrol XJ and diesel Mercedes-Benz S-class.

‘We are number one for petrol and have a 25% total share.

‘The big challenge with XJ is to bring diesel in and see how much of Mercedes-Benz’s market we will take. We’re beating the others with one hand tied behind our back, so when we free up the other hand we’ll have a go at getting diesel sales.

‘The sector is struggling, but it will recover because it is based on fashion. It’s not because people are not buying cars in that price range – they are opting for SUVs and sports cars instead.’

So with new diesels on the way, the back-up of Ford’s fleet operation (see below), and a real focus on delivering what the corporate customer and their drivers want, Jaguar is fighting back.

Hopefully that rollercoaster ride will become a flatter, more predictable and successful journey.

Keeping it in the Ford family

JAMES Drake-Lee sees being part of the Ford empire as a massive plus as he is able to leverage the company’s buying power and contacts.

But there has to be a careful balance: at the lower end of the market, Jaguar has to work with, not against, Ford, Mazda and Volvo.

He said: ‘We don’t step on the toes of Ford and they don’t step on ours. The corporate market is very different from the retail market. In the corporate market there are two very distinct customers for a single car – the fleet manager and the user – and when we are talking to the user we always approach them as Jaguar and as a Jaguar loan.

‘When we are talking to a fleet manager, he knows who owns who and as a result, the brands can talk to him as one. From Ford’s perspective, it views Jaguar as a bonus as we can talk about the trustmark as a whole.

‘Jaguar at the moment is 1.3% of the market. We are a relative minnow, certainly when compared to the volume players, although we do punch above our weight. We need to find ways of shouting louder, and being part of Ford we represent more than 25% of the fleet market so we can go to a fleet manager and say ‘talk to us’, albeit in our various guises.

‘We can then give fleets the benefit of hunting as a pack by offering them a solus trustmark deal containing Ford, Jaguar, Volvo, Land Rover and Mazda.

‘Fleets can then get a very strong deal and yet user-choosers still have choice. Everybody wins.’

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