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Niche strategy pays for Jaguar

Jaguar’s decision to move away from forcing volume into the UK market is paying off for both the brand and its dealers, says managing director Geoff Cousins.

Its niche premium strategy, to sell fewer cars for higher margins, has produced a 2% average return on sales in the first quarter of 2007. Volumes were 50% down on Q1 2006, although Cousins said the targets were still met.

The result, he says, is happier dealers, who are willing to invest in the brand and provide a better service for customers.

“We can’t chase volume for volume’s sake. We need to get sales and demand into balance,” he told AM.

“Obviously, we’d like to sell more but we have a plan and while it is a success that’s what we’re sticking to.”

Dealer stocking has been reduced by 34% since Cousins announced the strategy to the network in March 2006. Residual values have improved since it cut out rental volumes which flooded the market six months later, and dealers are not discounting heavily to achieve sales.

Cousins said XK is still doing well, although a drive for sales will be needed soon as it is more than a year since its launch. The S-type range has been simplified for run-out, but is “making dealers good money”.

X-type sales are still down and “challenging”, but a new corporate sales strategy is being rolled out this month.

Jaguar intends to use events and promotions to target particular retail customers, such as women and ethnic groups, which its rivals BMW and Mercedes-Benz have already won over successfully.

It has also developed an advance payment plan for the face-lifted XJ model, launched this month, that allows cash-rich buyers to pay 50% upfront and the balance in one payment two years later.

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