Jaguar: Dead Man's Curve

"I was cruising in my Stingray late one night
when an XKE pulled up on the right.
He rolled down the window of his shiny new Jag
and challenged me then and there to a drag.
I said, you're on it buddy, 'cause my mill's runnin' fine.
Let's come off the line, down at Sunset and Vine.
And I'll go you one better, if you've got the nerve,
let's race all the way... to dead man's curve."

Jan and Dean, Deadman's Curve, 1964 pop music hit.

Houston, Texas, June 2007

As a young man I loved Jaguars.

In '65, I was a 15-year-old, accompanying my family on a European sabbatical. I skipped school and hung out with mods and rockers at the bowling alley in Croydon, south of London.

The mods and rockers were rival counter-culture groups in the British baby-boom. As a "Yank", both groups expected me to conform to their mores.

For younger Americans: mods very loosely translates to "hippies", and rockers to "bikers."

One day this tough rocker kid approaches.

"Yank", says he, "I ga'ah stolen Jag outside, ten-bob says ye fraid 'ake a ride."

"What kinda Jag?"

"Brand new XKE roadster."

"Yer on, Rocker."

I followed him to a parking lot off the alley behind the building.

There sat a 1965 XKE.

When he started the engine, it was so smooth and quiet he had to point to the tach to convince me it was running.

We rocketed down alleys and through car parks, the Brit kid slamming the gearshift unnecessarily hard and oversteering as the rear end fishtailed.

Back at the bowling alley we quickly moved away from the hot ride, but I glanced admiringly back.

For my display of gumption, I was anointed a genuine Bri'sh rockah:

"Yehr OK, Yank, yeh a rockah now, so don be 'angin wif no bloode mods."

Seems like he forgot about the ten-bob bet.

But I'll never forget the thrilling 1965 XKE roadster ride.

Forty two years later, I wonder whether Jaguar has a long-term future.

With only .3% of the US market and falling ever faster, Jaguar is trapped between the rock of Lexus and the hard place called BMW.

May 2007 sales tell the tale; only 1,379 cars moved, down from 2,374 year ago.

Corporate Culture:

Taken over by bureaucratic British Leyland in 1968, the cat-car began a steady decline.

The company was rescued by Ford, for a then princely $2.82B, in 1989.

Jaguar has improved, but not quickly enough.

The marque has lost $500 million to $1 billion annually for several years, dragging down Ford's plan for its Premiere Auto Group (PAG) upmarket thrust.

Within PAG, Jaguar has increasingly been integrated with Land Rover.

Joint management, purchasing distribution networks, dualed dealerships, component sharing, and assembly plants bind and blur the two.

Once proud Jag has become a stone around Land Rover's neck. The boxy luxury-utility niche company would be slightly profitable if considered alone.

Ford Motor Company, now over leveraged and desperate for cash, must eventually sell all its PAG brands. This will be painful, as they have been integrated into the parent company.

Land Rover and Jaguar Cars will generally be considered one property.

Cerberus Capital Management, the private equity firm that undertook an overhaul of Chrysler Group, has also shown some interest in acquiring Jag and Land Rover

The question is: will new owners close Jaguar and concentrate on rebuilding Land Rover?

Quality Record

Ford has worked hard to improve the beloved Jags.

Jaguar had several areas needing attention after the 1989 purchase; poor quality, antiquated plants and processes, prohibitive UK labor and supply chain quality/costs.

The British Pound imposed Yen-like currency risks as well.

Ford lavished many billions trying to restore Jag to its former luster.

But the luxury space is a fast moving target. As Jaguars were improved, BMW, Lexus, and a score of imitators leapt ahead, raising the bar.

The 2007 JD Power Initial Quality awarded Jag 36 stars overall, out of 40. A very good score.

Upgraded UK plants have won awards, the British labor unions and government are scrambling to protect the cat-car jobs.

Respected German car magazine Auto Zeitung, in its 2006 Quality Report, awarded Jaguar top ranking. Jaguar finished 18th in 2004 and in 5th in 2005.

Despite all the above, critics blast the brand's interior fit and finish, and its mass market feel.

Automotive Lease Guide 2007 residuals study ranked Jaguar below the average of luxury brands.

Jaguar ranks high in buyer satisfaction with the dealership sales experience, as reported in J.D. Power's sales satisfaction index study.

There are 9 dealers selling Jaguars in Texas.

The Last of a Dying Breed

Ford's upscaling plan, possibly a play to family dynasty vanity, was seriously flawed. It distracted the company from a key weakness in the core product line: reliance on gas guzzling barges known to be doomed since at least 1978!

Instead of moving Ford upmarket, the acquisition brands moved downmarket. The mass-market Jaguar was doomed from the start.

The XK120 Roadster, with its introduction of the overhead camshaft, in 1948, established the Brit's in open sports cars.

Today, incredibly, many US-built cars still run cam-in-block dinosaur motors.

Jag's E-type sports car, introduced in 1961, was then the fastest, slickest, mass-produced car ever built.

The Jaguar mystique was not created by advertising, but by the cars themselves.

It could not be restored by Fording down the Jags and then running an ad campaign.

Who was fooled by the Mazda 6/Ford Mondeo/Volvo S-series/Jaguar X-Type badge engineering fiasco?

Of course, Ford is not the only company doing this.

Labor costs in Europe in general, and England specifically, are too high for mass produced products.

When China comes online, in less than a decade, all western brands will be built in Asia or disappear.

The Jag brand may follow the rest of by beloved post WW II British sports car legends into oblivion. Or return to its roots as a high-margin, low-volume niche player.

Texas Jaguar buyers assume significant risk that this brand will be discontinued or devalued.

This is even more likely if the US Dollar slides further against the British Pound in the coming months.

News-Blog Updates for Jag

12/17/07 Jag and Land Rover Deal: Tata of India