When Jaguar told U.S. dealers in 2000 that its sales volume would double in several years, dealer Dennis Squitieri jumped at the chance to improve his fortunes.
Surrounded by affluent customers at his store in Bergen, N.J., he built a sister dealership in nearby Englewood. But the entry-level X-Type flopped, and Jaguar's sales went into free fall. Last year Jaguar's U.S. sales were down 50.3 percent compared with 2002. Likewise, Squitieri's sales of new Jaguars are down 40 percent at both stores, and he is propping up his profits with service, parts and used cars.
"We drank the Kool-Aid," Squitieri says. "We spent a lot of money on expansion, on adding capacity. But we also spent money in stupid places because we were growing."
Squitieri is far from alone. Many dealers jumped on the Jaguar bandwagon. In 1999, Jaguar had 130 dealerships; it has 177 now. And as Jaguar struggles to recreate itself as a smaller, more exclusive luxury brand, those new dealerships will have a hard time covering their costs.
While much of the sales decline followed Jaguar's decision to ease up on the unprofitable X-Type, all four Jaguar nameplates have seen sharp percentage declines. And the bad news is far from over, Jaguar executives said in recent interviews.
"It's going to be goddamn tough for the next two or three years," said Bibiana Boerio, managing director of Jaguar Cars Ltd. in the United Kingdom since mid-2004. Boerio, an American, was brought in to fix the company, which is saddled with high costs and plummeting sales of cars that lag behind the top luxury competition.
"We know our mistakes, and we know where we are going," she says.
Boerio says that Jaguar is "in rebuild mode," and that sales volumes will decline in 2006 and 2007. The redesigned 2007 XK coupe coming this spring should ease the pain, but it won't be enough by itself, Boerio acknowledges.
Jaguar is pinning its rebound on the redesigned S-Type, which arrives in the United States in spring 2008. Jaguar sold 8,897 S-Types in the United States in 2005, far from its 2000 peak of 24,507 units.