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British Luxury Brand Keeps on Roaring

Joseph ChamaSrour - Jaguar Land Rover
Director General

STORY INLINE POST

Mon, 09/01/2014 - 10:14

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The UK was once the world’s largest exporter and second largest producer of cars. In recent years, it has taken a back seat, in terms of volume, in the global automotive industry production chain. The Financial Times has forecasted however that annual UK vehicle production will once again reach, and this time surpass, historic peak levels achieved in 1972 by 2017. Furthermore, in spite of the smaller role the UK has played in manufacturing, the country has remained a bastion of design and innovation, and little has been done to reduce the esteem in which it is held in this respect. Joseph ChamaSrour, Director General for Jaguar Land Rover in Mexico, explains this further. “The UK has been a constant source of luxury vehicles, with brands like Mini, Aston Martin, Rolls Royce, and Jaguar Land Rover all enjoying high levels of prestige. All of these brands are reputed for their British craftsmanship, in making handcrafted products that represent the ultimate in refinement. The UK is not particularly known for its industry today but it is hailed for the strength of its design.”

The Jaguar and Land Rover brands are undoubtedly strong examples of British success stories, and the company proudly asserts that all of its production, design, and assembly efforts remain based in the UK. In 2008, India’s Tata Motors bought the company for US$2 billion and turned a profit of over US$3 billion in 2013, making it an undeniably successful acquisition. Throughout its history, Jaguar Land Rover has managed to cultivate and retain a strong brand perception synonymous with luxury, quality, and provenance, and whilst the UK might be a long way from Mexico both geographically and figuratively, ChamaSrour explains that Jaguar Land Rover enjoys a strong brand image here. “We recently conducted a survey, which revealed that the association with the UK in Mexico is very strong and positive, particularly in terms of the Land Rover brand. Interestingly, there are particularly strong aspirations towards owning a Land Rover. The respondents that did not own a Land Rover had extremely high perceptions of the brand and desired to own one of our cars.”

The handcrafted design elements that feature in the company’s vehicles remain a major pull, with leather and wood interiors being a standard in them all. The high-end traditional feel of the vehicles is matched by equally highend technology, with Land Rover producing the world’s only two all-aluminum SUV models. Land Rover has pioneered the all-aluminum SUV, with the Range Rover and Range Rover Sport being the only two such models in the world today. The technology featured in such SUVs was ten years in the making and began with design efforts for Jaguar. The company initially recognized the benefits of being able to make notoriously heavy SUVs lighter and so invested heavily in this area. All of the Land Rover engines are now super-charged, and the smaller 2-liter engines boast 240hp while start-stop engine technology also helps to improve performance and reduce consumption. “Keeping up with consumption norms and requirements for many brands means producing smaller vehicles, but we are relying on technology without having to reduce the size of the vehicle. The competition is definitely starting to take note of what we are doing but we have a ten-year head start on other players,” explains ChamaSrour.

Whilst the Jaguar Land Rover consumer demographic certainly represents a small segment of the Mexican market, the company is enjoying increasing success. “From 2011 to 2012, our sales grew 70%, from 2012 to 2013 this was 44%, and we are on target to grow another 25%. In three years, our sales have tripled,” says ChamaSrour. This equates to 1,500 vehicles sold in 2013 and an expected 2,000 for 2014, giving the company a 0.5% share of the market. However, ChamaSrour reasons that a quick look at the automotive purchasing choices of the top 300 leaders listed by Mexico’s renowned Lideres magazine would show a 50% penetration level for Jaguar Land Rover. As this segment of the market is also not a natural consumer of the infamous second-hand cars imported from the US, the company enjoys a natural protection from the associated constraints felt by larger volume OEMs. What does impact its sales levels, however, is the perceived security issues that accompany luxury car ownership. ChamaSrour says this is an issue particularly for the Jaguar brand, which represents just 10% of the company’s sales. “There are not many Jaguars seen on the road. For this reason, it can be too ostentatious a choice for some.” The strategy for the Jaguar brand therefore is to progressively bring more accessible units with a broader appeal to the market in order to increase the number of units on Mexico’s roads, making people feel safer with the brand, as well as attracting a younger consumer in order to rejuvenate the brand’s image. 2015 will see the launch of a car with a larger appeal, which will be available for purchase in a US$50,000 price range and is designed to compete with cars such as the BMW 3 Series and Mercedes C-Class. There will also be a Jaguar crossover presented to the market to appeal to the segment demanding an SUVstyle vehicle. ChamaSrour does not believe that introducing wider volume cars will impact the brand’s boutique luxury image in any way. “The cheapest car in our line will be US$50,000 so we remain quite exclusive. An average Audi costs US$41,000, an average Mercedes-Benz or BMW costs US$47,000, and an average Jaguar Land Rover costs US$83,000. We are therefore on the same level as Porsche, which is our direct competitor,” says ChamaSrour. The company has also commenced a product introduction drive for Mexico, which began with the arrival of the F-Type to the market in 2013 and the launch of the F-Type Coupe in June 2014.

The boutique feeling that accompanies the brand can really be personified by the Director General’s own approach to customer service, with ChamaSrour saying “all customers have direct access to me as the Director General, and I am available 24/7 for their needs.” Another crucial element is the aftersales service. “Service is extremely important and in this vein, the supply of parts is a crucial element. When people buy a luxury brand vehicle they often worry that they will have to wait a long time to get parts,” he explains. To ensure speedy parts delivery, the company has established a large warehouse in Mexico City. According to ChamaSrour, this allows it to deliver ordered parts on the same day in 90% of cases within Mexico City, and outside of that within a day. All Jaguar Land Rover vehicles come with a three-year, 100,000-kilometer warranty which gives bumper-to-bumper coverage. ChamaSrour insists that this, along with the technical capacity needed to service the cars, should sufficiently incentivize customers to return to the dealerships for service. “In the first quarter of 2014, employees in our nine dealerships took a total of 800 training classes, varying from technical to management training depending on the relevant specialization. An average service man probably took about 11 classes in the same period. We are investing in this level of training to make sure that we can identify issues as soon as they arise,” says ChamaSrour. The level of technology in Jaguar Land Rover vehicles means that virtually everything is computerized, allowing technicians to assess the vehicle’s health and history at the touch of a button. This highly technical vehicle diagnosis ability requires specially trained technicians that can read the data properly

Another factor that distinguishes and constrains the luxury vehicle market is the high prevalence of cash buyers. Credit purchasers still remain limited in Mexico as 80% of Jaguar Land Rover’s customers buy in cash. It has therefore become clear that in order to attract significantly more customers, the company has to increase the current 20% of customers that purchase vehicles through credit. “It is fair to say that there is a big segment of the market that would buy one of our cars if they could purchase it on a three-year payment scheme, for example,” reasons ChamaSrour. For this reason Jaguar Land Rover has launched a strategic association with BBVA Bancomer to offer attractive financing and leasing plans.

 Looking to the future, it seems inevitable that Jaguar Land Rover will have to expand production beyond the British Isles. China is the number one market for the company today, and it is already making plans to open a plant there. ChamaSrour explains that company’s UK capacity for production is maxed out, with the plant there currently running 24 hours a day. Therefore, producing in China will free up more volume in the UK. “Right now, our biggest challenge is that we have a greater demand than we can supply. Some of our Range Rover models have a four-month waiting list in Mexico, and those cars sell for US$175,000,” says ChamaSrour, adding that “we have also been looking at Brazil as a potential production base for South America. That market is so closed that producing outside of it is not as economical in terms of taxes and duties, and opening a plant there makes sense.” Whether or not the company will ever produce in Mexico is unknown, but ChamaSrour does not completely rule it out. The US market is the company’s second largest, absorbing 60,000 vehicles a year, and Mexico may well turn out to be a logical North American production site in the future.

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