Jaguar hopes to turn the corner with the launch of its new XK model

Such is the importance of Jaguar’s new XK model to the company that its website describes the car as “The Future of Jaguar”. Many observers think the manufacturer’s financial problems are so serious that the XK and the new S-Type, launching in 2008, must be an unmitigated success to stop the wheels coming off.

The XK, Jaguar’s much-loved sports car, is the spiritual successor to the famous E-Type. Launching globally in March, the XK convertible will be unveiled at this week’s North American International Auto Show in Detroit. While some observers have criticised the styling as conservative, the majority of reviews have been positive and there seems genuine belief within the company that the XK could be the car to help Jaguar turn the corner. Director of corporate and governmental affairs Don Hume says/ “This is a signpost to the future and the first example of the new design language. It’s an important year for getting the business in order and XK will help.”

Ford bought Jaguar in 1990. It is now part of Ford’s Premier Automotive Group, alongside Aston Martin, Land Rover and Volvo. As a one-model brand with only the XJ in 1994, Jaguar sold 6,594 cars globally. But Ford ramped up production, and in 1995 global sales jumped to 33,465. By 2000, it was selling 90,000 cars around the world, thanks to the XK’s introduction in 1996 and the S-Type in 1999. In 2002, global sales stood at 130,330 after the launch of the mass-market X-Type.

However, sales have since fallen to 119,000 in 2004. Jaguar is unlikely to break the 100,000 barrier for 2005 after cutting production of the X-Type in the US mid-way through the year. In the UK last year, 26,328 cars were sold, according to the Society of Motor Manufacturers and Traders – some 19 per cent down on the 32,525 in 2004.

Ford recently ploughed &£1.2bn into Jaguar, bringing its total investment to &£4bn. The company will use the money to recapitalise Jaguar, claiming this reaffirms its commitment to the marque, amid rumours of a possible sale to the Renault/Nissan partnership. Jaguar made a pre-tax loss of &£430m in 2004, an improvement on the &£601m loss in 2003; but hopes that the company would break even by 2007 were abandoned.

Critics believe Jaguar’s middle-market foray with the X-Type diluted the brand’s prestige. While rivals such as BMW have succeeded in making attractive entry-level models, the X-Type has been compared to the Ford Mondeo, which has irritated traditional Jaguar drivers. Hume says the X-Type has served a “positive purpose” by introducing new customers to Jaguar and “almost single-handedly” doubling sales. But one industry source says: “The X-Type was successful in the short term, but will prove a mistake. Jaguar should have stopped the range extension at the S-Type.”

The source thinks “going niche” by sticking to the XJ and the XK is Jaguar’s best chance of returning to profit. There is speculation that the company will discontinue the X-Type in the US later this year. A source claims the decision has already been taken but the “jury is still out” about the X-Type’s future in the UK.

A reworked version of Euro RSCG Fuel’s “Gorgeous” Jaguar ad (MW October 20) will launch next month. The XK, Jaguar’s premium model priced at about &£59,000, is likely to make up just ten per cent of its total global sales this year. But the future of the iconic company could hang on a successful launch.

Robert Lester

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