Jaguar X type

Author
Discussion

g77

63 posts

222 months

Monday 30th October 2006
quotequote all
Phil Hopkins said:
g77 said:
As has been pointed out, at the top end of the model range - the S classes and the 7 series are not huge profit making vehicles. BMW gets its profit from the bog standard 318s not 760Li.


It's the opposite way round for Jaguar. XJs and XKs are far more profitable than X & S-TYPEs which they ultimately lose money on. Hence why Jaguar have heavily pushed XJs this year.


Surely this if this is the case, then it is a fundamentally flawed business model.
You need to make a profit on all the cars but in particular the ones that sell in the highest volume, i.e. s and x type.

Why would Jaguar be losing money on the x - type or the s type?
Labour costs will be the same across the range, the development costs for both models will have been paid for, similarly for the engines?

Phil Hopkins

17,110 posts

218 months

Monday 30th October 2006
quotequote all
g77 said:
Phil Hopkins said:
g77 said:
As has been pointed out, at the top end of the model range - the S classes and the 7 series are not huge profit making vehicles. BMW gets its profit from the bog standard 318s not 760Li.


It's the opposite way round for Jaguar. XJs and XKs are far more profitable than X & S-TYPEs which they ultimately lose money on. Hence why Jaguar have heavily pushed XJs this year.


Surely this if this is the case, then it is a fundamentally flawed business model.
You need to make a profit on all the cars but in particular the ones that sell in the highest volume, i.e. s and x type.

Why would Jaguar be losing money on the x - type or the s type?
Labour costs will be the same across the range, the development costs for both models will have been paid for, similarly for the engines?


I suspect with the X-TYPE it's down to the fact they're not making enough of them to get the full benefits of economies of scale. When you take into account they've got to price them competitively versus the german opposition who produce far more cars at that level and therefore do get the full benefit of it. - Hence more profitable.

The XJ on the other hand as you've said, costs a similiar amount in labour but has a far higher price tag.

I can't really comment on the exact reasons as i'm not personally aware of them myself, all I can relay is what we've been told direct from Jaguar themselves.

They're going for a lower volume/higher profit approach. That's a pretty good plan if you ask me!

Edited by Phil Hopkins on Monday 30th October 16:40

g77

63 posts

222 months

Monday 30th October 2006
quotequote all
If a plan works, then it is always considered good.

Low volume, high profit - in this case the business model would be Porsche; I can't really think of anyone else that has managed to achieve this holy grail properly. (and I believe that currency hedge trading is also a significant part of Porsche's profitability).

If that's what Jag is going for; then good luck but they'll need some minerals to pull that off.

It wasn't too long ago that Porsche were in trouble themselves so I guess that it is possible to turn it around.

g77

63 posts

222 months

Monday 30th October 2006
quotequote all
If a plan works, then it is always considered good.

Low volume, high profit - in this case the business model would be Porsche; I can't really think of anyone else that has managed to achieve this holy grail properly. (and I believe that currency hedge trading is also a significant part of Porsche's profitability).

If that's what Jag is going for; then good luck but they'll need some minerals to pull that off.

It wasn't too long ago that Porsche were in trouble themselves so I guess that it is possible to turn it around.

Phil Hopkins

17,110 posts

218 months

Monday 30th October 2006
quotequote all
g77 said:
If a plan works, then it is always considered good.

Low volume, high profit - in this case the business model would be Porsche; I can't really think of anyone else that has managed to achieve this holy grail properly. (and I believe that currency hedge trading is also a significant part of Porsche's profitability).

If that's what Jag is going for; then good luck but they'll need some minerals to pull that off.

It wasn't too long ago that Porsche were in trouble themselves so I guess that it is possible to turn it around.


Definately. Aston are another relevant brand, they went from being effectively a lost cause to turning a profit. It can be done, and done well provided the right management are in place and the right product lineup.

Marquis_Rex

7,377 posts

240 months

Monday 30th October 2006
quotequote all
g77 said:
I agree that the problem with Jaguar has been poor management - the cars have been well designed / reasonably well built but poorly marketed and promoted.
Actually compared to contemporary German standards they've been exceptional.

g77 said:
And I think that it is far too easy to blame Ford for restricting the choices that the Jagaur management have been able to make. From what I have seen; Jaguar has been given far too much freedom and has made poor choices, particulary in terms of marketing and styling. (excepting the whole diesel engine debacle which Ford does have to taken some responsibility for).

You mean like freedom to pursue their own small double wishbone suspended rear wheel drive platform? Or to develop a small petrol V6? There's absolutely nothing wrong with the Modeo Platform but you only have to trawl through negative posts about the X type to see it's all to do with Market perception. Does anyone rememeber how Autocar hailed the X type as more of enthusiasts handling car then the 3 series? No I thought not. Things obviously changed after the next 3 series upgrade was launched and people forgot that road test.
In this market place it's not only about function and achieving targets, but about perceived image. So if Jaguar were to have been given less freedom, as you perhaps suggest, the S type may have had a Front wheel drive Taurus or Volvo S80 platform instead of the excellent double wishbone RWD one it has now. I'm sure Cross could have also performed his magic on it and made it handle well within the constraints. And how do you imagine it would come across to the public?
g77 said:
Jaguar have had the protection of one of the major OEMs for a decade and what did they do? Played it safe and conservative with the XJ and the S type styling - this was the time to be bold and revolutionise the Jaguar design to next level not evolve a pastiche of the past 50 years

It's interesting that this conservative styling criticism is always leveled at Jaguar, when Porsche, who follow the same philosophy are doing rather well right now and the new Mini sales have been consistently doing better and better. The new Mini and the New New Mini are hardly ground breaking in terms of styling- in a market place that is arguably more fashion conscious and less conservative. I put to you that had that bearded religious Mormon Chris Bangle replaced the late great legendary Geof Lawson and commited his acts of abortion on the Jaguar range- then they would have sold no better.

I think the Ford take over of Jaguar was definately beneficial and I myself was tired of hearing criticisms of Ford (Mainly from the newly absorbed Land Rover lot) however I also came across ALOT of pro-Ford folk all to eager to criticize Jaguar also which I Think grossly unfair.



Edited by Marquis_Rex on Monday 30th October 17:53

Marquis_Rex

7,377 posts

240 months

Monday 30th October 2006
quotequote all
Phil Hopkins said:
g77 said:
Phil Hopkins said:
g77 said:
As has been pointed out, at the top end of the model range - the S classes and the 7 series are not huge profit making vehicles. BMW gets its profit from the bog standard 318s not 760Li.


It's the opposite way round for Jaguar. XJs and XKs are far more profitable than X & S-TYPEs which they ultimately lose money on. Hence why Jaguar have heavily pushed XJs this year.


Surely this if this is the case, then it is a fundamentally flawed business model.
You need to make a profit on all the cars but in particular the ones that sell in the highest volume, i.e. s and x type.

Why would Jaguar be losing money on the x - type or the s type?
Labour costs will be the same across the range, the development costs for both models will have been paid for, similarly for the engines?


I suspect with the X-TYPE it's down to the fact they're not making enough of them to get the full benefits of economies of scale. When you take into account they've got to price them competitively versus the german opposition who produce far more cars at that level and therefore do get the full benefit of it. - Hence more profitable.

The XJ on the other hand as you've said, costs a similiar amount in labour but has a far higher price tag.

I can't really comment on the exact reasons as i'm not personally aware of them myself, all I can relay is what we've been told direct from Jaguar themselves.

They're going for a lower volume/higher profit approach. That's a pretty good plan if you ask me!

Edited by Phil Hopkins on Monday 30th October 16:40


Profit margins are less on the X type and as Phil pointed out it was geared up for greater projected sales. This combined with the fact that there's not a great deal of difference in R and D costs between any of the cars...

g77

63 posts

222 months

Monday 30th October 2006
quotequote all
End of the day, all companies have to make a profit; Jaguar do not make a profit and haven't made a profit for quite a while regardless of whether they choose to aim for the low volume high profit model etc

And what Jag has got out of the Ford deal, far outweighes what Ford have got out of the deal. You can argue that Ford didn't do their homework but that doesn't change the deal today.

I think that you find that a lot of the anti Jag coming from the Ford biased people is down to the fact that we can recognise that there are serious problems within Ford but substaintial resources are being consumed in trying to stop the Jaguar boat from rolling over.

We can argue all day about engines and styling but the fact remains that Ford has been pumping billons of pounds into Jaguar ever since they took over. And Ford is now backing up against a wall and needs to look after itself first.
In the US, they are talking about cutting tens of thousands jobs and closing several plants down. Now that action is in no way related to Jaguar, but I am sure you can see how the money that is pumped into Jaguar would leave a very bitter taste in the mouth if you were a Ford US employee.

Similarly in Europe, you only have to go back two or three years ago to see a time when Ford was struggling.

I guess my over simple analagy is that of a mate who keeps on borrowing money off you to go down the pub and gets drunk whilst you have to stay at work and never pays you back. But as you will point out, I am baised.



Phil Hopkins

17,110 posts

218 months

Monday 30th October 2006
quotequote all
g77, how are you biased mate? Do you work for Ford or something?

g77

63 posts

222 months

Monday 30th October 2006
quotequote all


Edited by Phil Hopkins on Monday 30th October 16:40
[/quote]

Profit margins are less on the X type and as Phil pointed out it was geared up for greater projected sales. This combined with the fact that there's not a great deal of difference in R and D costs between any of the cars...[/quote]

Don't accept the statement above for the reasons below you will normally find that the division that sells the cars to the dealers is completely seperate from the division that makes them; which in turn is seperate from the division that designs them.

Manufacturing costs, material cost, R&D costs are all taken centrally - so that the actual cost can be better hidden and thus not to scare the stock markets as to the actual return on investment that OEMs actually make. In this particular case, the model is further complicated by Ford hiding the figures even further.

I do accept that the price that Jaguar chooses to sell its cars to the dealer is dependant on the sales volumes but I don;t know how much the Jag "cost" price changes but I cannot imagine that Jaguar can force the dealers to sell certain cars at a loss as I am sure we would have heard about it by now.

wheeljack888

610 posts

256 months

Monday 30th October 2006
quotequote all
I work in Product Development at Ford and work on the V6 & V8 diesels and am regularly working with PD at JLR. G77, things are not quite as straightforward as they seem. If you work at DDC/Dunton give me a shout.

Cheers

Phil



Marquis_Rex

7,377 posts

240 months

Monday 30th October 2006
quotequote all
g77 said:
I think that you find that a lot of the anti Jag coming from the Ford biased people is down to the fact that we can recognise that there are serious problems within Ford but substaintial resources are being consumed in trying to stop the Jaguar boat from rolling over.



It's never as simple as being posted here. To put it into perspective or at least to post another perspective forward:
Jaguar were making money fine, even with the launch of the S type. Shall we say, there was a drive to expand and put all the money back into expansion. Alot of ambitious targets were expected to be met. I firmly believe if they had stayed a 3 car range it would be a different story today.
It's easy for someone to glance back now in retrospect in light of what I just said, saying that Jaguar was pushed to expand too quickly with being made to meet unrealistic expansion/growth/profit projections- however, it's never quite that simple- unlike you or the Anti-Ford lot, I can understand why there would be a need for Jaguar to grow, as in the premium car sector with clever marketing and perceived image good money could have been made.

Phil Hopkins

17,110 posts

218 months

Monday 30th October 2006
quotequote all
g77 said:

I do accept that the price that Jaguar chooses to sell its cars to the dealer is dependant on the sales volumes but I don;t know how much the Jag "cost" price changes but I cannot imagine that Jaguar can force the dealers to sell certain cars at a loss as I am sure we would have heard about it by now.


No, Jaguar aren't forcing US to sell them at a loss, THEY are selling them at a loss to US, we in turn, sell them for whatever we can get providing it's above wholesale and at or below list price.

Just think how heavily supported the X-TYPE range is, on some models there is up to £2,000 customer support, not to mention deposit contributions of £1,500 to take finance. If you take Jaguar and the associated financial services department as one big bottom line (which ultimately, it is), it's hard to see how they can make much per car if they're binning another £3,500 per car in support. That doesn't include other such ladder bonuses and unit related additional monies they pay the dealer network.

Phil Hopkins

17,110 posts

218 months

Monday 30th October 2006
quotequote all
g77 said:

Don't accept the statement above for the reasons below you will normally find that the division that sells the cars to the dealers is completely seperate from the division that makes them; which in turn is seperate from the division that designs them.


You're spot on. Each 'division' will run its own bottom line. HOWEVER, just as with the Sales & Aftersales department at a dealership, it all ultimately goes into one pot. That pot is Jaguar Cars Ltd.

You don't see it reported that the Jaguar production division is unprofitable but don't worry about it, atleast the dealer sales division is.

wheeljack888

610 posts

256 months

Monday 30th October 2006
quotequote all
Absolutely right Rex & Phil, the 'X' type is by far the largest cause of problems at Jaguar. However with the start of production of the Freelander at Halewood fixed costs can now be shared with LR and solve much of the plant utilisation problem. LR has been profitable for a while now but a large reason for this is due to the engine sharing with Jaguar.

Edited by wheeljack888 on Monday 30th October 19:58

g77

63 posts

222 months

Monday 30th October 2006
quotequote all
Phil Hopkins said:
g77 said:

Don't accept the statement above for the reasons below you will normally find that the division that sells the cars to the dealers is completely seperate from the division that makes them; which in turn is seperate from the division that designs them.


You're spot on. Each 'division' will run its own bottom line. HOWEVER, just as with the Sales & Aftersales department at a dealership, it all ultimately goes into one pot. That pot is Jaguar Cars Ltd.

You don't see it reported that the Jaguar production division is unprofitable but don't worry about it, atleast the dealer sales division is.


Just to point out that there isn't actually a Jaguar cars ltd; comes under PAG.
Which in turn comes under Ford of America's figures, not Ford of Europe.
And as has been pointed out, Ford supply a lot of engines for Jaguar and these are taken out of Ford of Europe figures.
So hopefully you see what I mean about a complicated accounting trail.

g77

63 posts

222 months

Monday 30th October 2006
quotequote all
IMHO I think that the problem is quite simple - Jaguar are not making cars which are attractive enough to people, whereas Landrover are making cars that people want to buy.

If you want to say that the Jaguar management were forced into making the X-Type then fair enough, I am not in a position to pass judgement about that. But the principle behind it was sound - as I have said previously, BMW don't make money out of 7 Series or M3s but out of bog standard 318s. Perhaps I am mis-informed but I didn't hear much out of Jag's management at the time to complain that it was a dead end idea. As Rex has so adriotly pointed out, it is easy to complain about a wrong decision in hindsight.

I do not believe that if Jaguar had remained as a three car line up; they would have been any more profitable than they are today.

And I do not believe that the X type is a bad car, I still maintain that it was poorly marketed and the whole Mondeo platform concept was badly managed in terms of the journalists.
The x type is no better or worse than the Passat / A4, Touerag / Cayenne, 924 / Audi, A3 / Golf/ Seat/TT, C2 / 207, E class / CLS in terms of cross platform sharing.
The key to sharing platforms is to make it invisible to the customer and I would argue that the X-type / Mondeo sharing is far more invisible than the A3 / Golf sharing

Wheeljack888 - I have no qualms with JLR engineers, I have worked with them extensively in terms of PD and I have always found them to be at the top of their game. Workload at our level is normally decided by political games played by people defending their empire rather than looking at the bigger picture. Imagine how much easier your job would be if the whole powerpack concept were actually followed, no more packaging, re-packaging issues. And time could be spend on actually testing the final design thus leading to a cheaper and more robust design.
As you have said you have worked on the V6 - three customers and three different engines, similarly for the V8. BMW make the whole concept of powerpacks work consistanly across the range.

wheeljack888

610 posts

256 months

Tuesday 31st October 2006
quotequote all
g77 said:
Wheeljack888 - I have no qualms with JLR engineers, I have worked with them extensively in terms of PD and I have always found them to be at the top of their game. Workload at our level is normally decided by political games played by people defending their empire rather than looking at the bigger picture. Imagine how much easier your job would be if the whole powerpack concept were actually followed, no more packaging, re-packaging issues. And time could be spend on actually testing the final design thus leading to a cheaper and more robust design.
As you have said you have worked on the V6 - three customers and three different engines, similarly for the V8. BMW make the whole concept of powerpacks work consistanly across the range.


I'm not disagreeing with the level of politics at Ford, which is incredibly frustrating, but it would be too easy to dismiss all of it being purely parochial in nature.

The example of the three V6 variants can be explained by the fundamental architecture differences of the vehicles they are installed in. PSA has the engine in transverse application. Jaguar has a longitudinal application. LR (a relative latecomer considering Ford didn't own LR before this engine design was started) has a longitudinal application with a dirty great drive-axle underneath and has to perform death-defying vehicular angles when off-roading without the oil from the sump emptying itself into the turbo, also has to perform a ~750mm wading test, and also have a hydraulic pump that pushes an extra 5 kilonewtons of FEAD belt-load when it turns a corner and the Active-Roll-Control system is activated. There is also the fact that the engine was largely designed well after the vehicles were designed and telling 3 vehicle customers to change their Chassis, Suspension, Body-In-White and spend literally millions on new pressings and have to complete a load of new vehicle DV (incl. handling, crash, NVH, etc) would be met with an understandably frosty reception. The V8 has one customer and two engines variants one being a monocoque with the differential hanging off the sump and the other variant with the differential hanging off the chassis ladderframe. Again both vehicles designed well before the engine was conceived.

BMW does have a powerpack strategy but this has developed over decades of offering cars that are the same architectural formula scaled up and down to suit. They all are longitudinal front-engined, rear wheel drive, axle infront of the engine to acheive mid weight distribution, MacPherson Strut at the front, Independent multi-link at the rear. A simple system that offers lots and lots of space for an engine to fit into. And their engines are powerful, efficient, and amazing. But they are also huge and sometimes very heavy (the M3 S54 I6 is an absolute porker weighing at over 220kg with its cast iron block, twin VANOS, gigantic manifold with port throttles, etc). The price to pay with this is BMW's do have poor interior space, and a relatively poor ride quality, the I6 engine in a full-frontal crash will end up in the rear passenger seat, and when in jacked-up X3 and X5 form not have the necessary wheel articulation when confronted with an off-road situation. They are brilliant cars, absolutely no doubt, but they do have their limitations & drawbacks.

Jaguar are in a desperate state and are paying the price for past mistakes. But they can't all be attributed to Jag alone, Ford has used Jaguar as a future high-flying executives creche for as long as they've owned it. The 'X'type and 'S'type were both conceived when grand-old-uncle Nick Scheele was running Jag. In the context of the time when the 'S' and 'X' type were just started being designed (well before Ford had bought Volvo and LR) Ford desperately wanted luxury vehicles to compete with the Lexus, Infiniti and Acura in the US not just BMW, Mercedes, Volvo and Audi in Europe. Jaguar was the nameplate that fitted the bill and off they went. First came the the 'S' type which was a 'joint-venture' clean sheet design with FNA for Lincoln. They created fundamentally a very good car, unfortunately however it was initially poorly executed, but when (reasonably heavily) tweaked for X202 it became brilliant. From what I've been told the DEW98 platform is quite an expensive platform to make in terms of labour costs because they have lots of small pressings that need process time comsuming assembling and welding, also the allround double wishbone suspension is quite fiddly. But the tooling costs were apparently quite low because the components were relatively simple. Projected volumes were also quite low at an existing facility (Castle Bromwich) and the cycle-time for the assembly line was designed to suit. It sold OK but not spectacularily and for the start it was just sufficient to cover the investment costs. The 'X'type came along, and to achieve the very ambitious target volume and target vehicle price it required serious tooling investment, even with sharing some Mondeo underpinnings. It also required a new facility and Halewood (which was scaling down Escort production) fitted the bill perfectly. IIRC the cycletime for the line was designed with a ~120000 volume with potential for nearer 200000 with some extra shifts. And as you know the rest is history! The 'X' type has been a disaster, pretty much always selling less than half the target volume, and as you may know that once you've designed the line for a particular cycletime you don't just slow the rate, you run it and stop it! There are always things you can do to frig it, but not by that much. There is reasonable evidence that the 'X'type has cannibalised sales from the 'S'type and even the XJ. Hopefully this nightmare situation is coming to an end with the start of Freelander production.

Jaguar (or rather Ford) has now learned from this and plans are much more modest. But it hasn't all been one way with Jag as they 'gave' Aston Martin the DB7, a lot of engineering and recently the AMV8 engine. They've donated their petrol engines to LR which before were buying very heavily marked-up BMW engines that eroded profits. Also don't forget the V6 Diesel was designed by Ford but largely paid for by Jaguar and PSA, LR as mentioned didn't come along until later and rather ironically became it's largest customer. The V8 was derived from the V6, and both are now making money for LR, again because they are not buying heavily marked-up diesel's from BMW. Finally the V8 as you now has serious future potential for the parent company.

Cheers

Phil

Phil Hopkins

17,110 posts

218 months

Tuesday 31st October 2006
quotequote all
Very informative post Phil. Cheers.

g77

63 posts

222 months

Tuesday 31st October 2006
quotequote all
Wheeljack888
Don't disagree with your description of why we have three different engine architectures on the Lion V6; I was just using it as an illustrative point that Powertrain management tries to comprimise to keep everyone happy but ends up pleasing no-one.
And invairably we will always be dealing with fixed vehicle points as the vehicle will always be in existance first.
As a concept I think that the powerpack still has great merit - but as you have indicated it could make the engines over heavy and over large but on the flip side they will be far cheaper to manufacture, they will be more durable and have better quality, parts will be cheaper to source through economies of scale etc. So I guess that we have to wait and see which direction we are sent down, eitherway it will be good for engineering in Essex.
Perhaps if powertrain design is all brought under one roof, then the "power" of the powertrain team would be increased as a natural byproduct.

And I don't dispute that PSA and Jag did contribute toward the costs but look at the work that was contracted outside so that Lion could be accomodated.Don't get me wrong I think that the Lion V6 and V8 are superb engines and are best in class but I for one would much rather we had a coherent small diesel engine strategy that involved more Ford designed small diesel engines.

Whilst I agree that Ford does have to take some responsibility for the mess that Jaguar is in; but given the current financial climate within Ford and the "way forward" I think that we have a mountain to climb ourselves which is what my original thread was about.

And I do have to admit that in my overzealous haste; I did completely ignore the whole gasoline engine side of things. Point given to you; Landrover have benefitted greatly from the Jag petrol engines.

Further point to you for your crushing knowledge x and s type. I'll bow to your superior knowledge

Anyway it'll save us time typing and probably protect the names of both Ford and JLR if we continue our dicussion over coffee. Downstairs kitchen is my hangout - next time I'm in the office I pour you a cup.