Jaguar sold 2,388 cars in Germany between January and June, 20.9 percent below the same period in 2002. Land Rover sales increased 2.6 percent to 4,355 units for the same period.
"We will not be able to reach our high targets for 2003," said Reinhard Kuenstler, the new chairman of Jaguar and Land Rover in Germany. "However, by the end of this year we will have sold more Jaguar and Land Rover vehicles than in 2002."
Kuenstler attributed the first-half decline to a weak economy, above-average sales a year ago following the launch of the S-type, pressure placed on dealers in the past to make new-registration statistics look better, and a delayed sales launch on May 24 of the Jaguar XJ.
The German sales network is also a reason for the current problems, he said.
"The quality of too many of our dealers is insufficient," he said.
About a third of the 86 German Jaguar dealers will have to take part in a "quality and performance upgrade program." Last year the importer terminated the contracts of nine Jaguar and 13 Land Rover sales partners. Jaguar and Land Rover are brands of Ford's Premier Automotive Group, which also includes Volvo and Aston Martin.
"I assume that by the end of this year we will have to part company with a few more dealers," Reinhard said.
A German Jaguar dealer's average margin currently is less than 1 percent, while that of the 190 Land Rover sales partners (70 of which also sell Jaguar) is 1.3 percent.
But Kuenstler remains optimistic.
"My aim is for the dealers of both brands to receive a margin of 2 percent," he said. We should be able to reach that target by 2005-2006."
Kuenstler wants the new Jaguar dealer contracts, which are in accordance with the new block exemption, signed by the end of September. The company's original deadline was the end of May but detailed negotiations over the new margins have delayed the process, a member of the dealer association said.
The parties did not disclose details of the new contract. However, Kuenstler gave some indication of the new structures: "In future there will be no more margins dependent on quantity. Dealers will only be rewarded according to the quality they provide -- such as for example the number of contacts with potential customers, the number of test drives and the number of cars that are in their show rooms."
Kuenstler hopes the introduction of diesel models will increase fleet and car hire business.
The new boss has lowered his expectations for 2003. Kuenstler's new forecast for Jaguar is annual sales of 6,400 to 6,500 vehicles - instead of 7,700 cars, as originally forecasted in February. The forecast figures for Land Rover were reduced from more than 10,000 to between 9,200 and 9,300 units.