As Ford Motor Co. struggles to maintain competitive and return to profitability, at press time the automaker was making plans to spin-off its Jaguar and Land Rover brands to India-based Tata Motors. It is a move that has come too late for most of Ford’s black-owned dealerships.
According to A.V. Fleming Ph.D., executive director of the Ford Motor Minority Dealers Association, the sales-volume for standalone Jaguar stores is not enough to support the dealerships.
During its hey-day, Jaguar sales in the U. S. were at an all-time high for the luxury import brand. The automaker’s sales climbed from 35,039 cars in 1999 to a record 61,204 cars by 2002. “This was driven by an expansion in the U.S. luxury segment, and at the time, Jaguar had a larger range of models that included the S-Type and X-Type,” says Craig Samara, vice president of Jaguar’s retail operations.
Jaguar’s then bright future, becoming a high-volume brand competing with BMW and Lexus, finally allowed a handful of black dealers to realize their dream of owning a high-end import brand that was once difficult to attain. In 2002, Nathan Conyers (BE’s 1995 AUTO DEALER OF THE YEAR) was given the opportunity by FMC to own a Jaguar store. He took the profits from selling his inner-city Detroit Ford franchise, making a healthy investment toward a new $10 million standalone suburban Jaguar store. Initially, Conyers’ Jaguar dealership was so successful he was able to buy it from Ford’s Dealer Development Investment Program within six months of opening the doors. His store was selling a high of 1,110 new cars a year in 2003 until the economic downturn in Michigan’s automotive economy, leading to a decrease to 200 new cars in 2007.
After 37 years in the business, Conyers never expected in December 2007 he would be selling an unprofitable franchise. Losses were $550,000 and $500,000 in 2006 and 2007, respectively. Conyers, who co-founded Ford’s Black Dealer Association with the Rev. Jesse Jackson in the ’70s, was once responsible for aiding other minority dealers in landing dealership opportunities.
Conyers’ sales were only a mirror of Jaguar’s overall sales slide. By 2007, Jaguar only sold a dismal 15,683
new cars in the U.S. Prior to the stratospheric fuel prices, many auto analysts believed it was almost impossible for a standalone dealer to survive today without having SUVs or crossovers–car-based utilities–in their lineup. In 2002, Jaguar had 42 standalone dealers, growing to 50 by 2004. By the end of 2007, Jaguar had 39 dealers. “This was part of the plan to realign the brand to where it needed to be in the luxury sector market,” Samara says. “Part of that [sector] saw a natural reduction in the dealer numbers; some included the combination of Jaguar and Land Rover dual dealerships, with the end result of 175 of the right dealers in the right market.”“Jaguar’s sales decline during the past few years was a strategic decision based upon the corporation and its dealers’ profitability being recognized through heavily contented vehicles that the luxury consumers desire. As a result, this segment is more niche, with lower volumes, hence lower sales as a result,” Samara adds. Unlike Conyers, David Stephens (Jaguar’s first black dealer under FMC’s ownership and BE’s 2001 AUTO DEALER
OF THE YEAR) has managed to weather the storm, beating the odds. Since opening his suburban Jaguar store in Dallas in 1999, he has sustained profitability every year without the benefit of the Land Rover brand, focusing on service operations and selling used luxury vehicles, Stephens says.Although the single-point store has been profitable, Stephens says, “I haven’t made a profit from the new car department selling Jaguars since 2004.” According to the National Automobile Dealer Association’s latest statistics, the average new car dealer in 2006 didn’t turn a profit in the new car department. Thus, industry analysts believe this further emphasizes the competitive nature of the industry and why so many dealers such as Stephens are selling their vehicles at or below invoice. Overall, unlike make industry analysts, Samara really doesn’t see the past few years as being a sales decline, noting that the company started out repositioning just over two years to have much smaller volumes based on a smaller range of cars. “This began with the new [Jaguar] XK and will be reinforced with the all-new [Jaguar] XF
(replacing the S-Type),” Samara says. “Jaguar has no ambitions today to be a major-volume car manufacturer in the U.S. or around the world. It’s a luxury brand that offers the exclusivity of beautiful fast cars.”Despite Jaguar’s past troubles, the cat seems to be coming alive again. The all-new $50,000 XF, the least expensive vehicle in the brand’s lineup, has single-handily reversed Jaguar’s 4-year sales slide. Thanks to the XF, Jaguar posted a year-to-year monthly sales increase in March and April. In fact, as the overall U.S. automotive industry sales declined 6.8% in April from a year ago and consumers shifted toward more fuel-efficient, economical, 4-cylinder vehicles, Jaguar’s sales soared 25.4% during the month from the previous year. It was the highest increase of any brand, according to the Automotive News Data Center.
Despite recent sales figures, many auto analysts and industry critics believe the corporation’s new mission statement is contrary to their philosophy of becoming a volume automaker several years earlier. Many minority dealers would have avoided risking the investment had they known of Jaguar’s current sales strategy.