PARIS -- Jaguar Land Rover dealers are struggling because of acute shortages of key products, said Joe Eberhardt, the company's CEO for North America.
The inventory crunch likely will ease toward the end of the year and in early 2015, said Eberhardt, a former Chrysler sales and marketing chief who joined JLR in January. He said the brands are preparing for the launch of new vehicles -- the Land Rover Discovery Sport comes next year, and the Jaguar XE sedan arrives in 2016.
Jaguar Land Rover has 166 Land Rover and 164 Jaguar franchises in the U.S.
Staff Reporter Diana T. Kurylko interviewed Eberhardt, 51, last month at the auto show here, where both new models debuted.
Q: Do you expect an uptick in 2014 sales? Jaguar Land Rover was down in September but up 5 percent for the first nine months. Will it still be constrained because of vehicle shortages?
A: The situation will improve on Land Rover toward the end of the year, just barely. It will improve in the first quarter of next year.
Will JLR be up this year?
On Land Rover, yes. On Jaguar, we are still constrained on the XF, which is our volume model, and there is nothing to make up that volume. I do not think we will be up at the end of the year.
How much inventory is there?
Days supply at the end of September is on average 40, down from 75 earlier in the year. We have 35 days of XF and 27 on the XJ. Land Rover is 18 days total, Range Rover Sport is 11 and Range Rover is 12 -- which is unheard of. We have a six-month sold order bank for the Range Rover, four months for the Range Rover Sport and three months for the LR4.
We have opened up the pipeline, not just the next 60 days but further out. We are opening up the allocation and product system that far out so that dealers can know when their vehicles are coming.
It's a problem, but a good problem to have. You can either have too many cars or not enough. It has just been extreme.
How are Jaguar dealers coping?
It is very challenging. We have low inventory and a fairly complex model lineup for Jaguar, and it is very difficult to fill customer needs. We need to manage dealers through that process. They aren't very happy about it, and it's understandable.
What's your biggest accomplishment since joining JLR, and what are your goals going forward?
The biggest accomplishment is to continue the positive development of the business in North America. There is nothing that needed to be fundamentally changed. In many situations where you come in, you need a turnaround or to start this fresh or new. We are not moving or changing brands or trying to reinvent the retail model.
A lot of positive initiatives have been launched. It is not a big accomplishment, but that is not disappointing to me. Providing the support and focus to the initiatives and managing this situation with dealers -- that is challenging. We're providing the comfort that there is relief in sight with the availability of Land Rovers and a bright future for the Jaguar brand.
Even with the product shortages, the Land Rover franchise continues to be more profitable than Jaguar?
From the dealer's perspective, one brand is significantly more profitable than the other. As a dealer, you make investment choices and where you get the highest return. In fairness to our Jaguar dealers, they have invested in the future. They have not waited to see those returns. We have to fulfill our promise that we will bring products to market that will help them get returns on their investments.
You said earlier this year that Jaguar Land Rover North America is working to revamp its variable margin. What progress has been made?
We are discussing it with the dealer council. There are no decisions in any direction yet. What we did say is we want to focus less on the process and more on the results. We have had first discussions with our retailer cabinet, our dealer council, and we will continue that in November at our next meeting. There is a lot of detail that needs to be worked through.
You attended your first dealer meeting in July, in the U.K.?
Yes, it was the highest attendance ever -- 90 percent. It was unheard of, especially going to the U.K. We were able to have them visit the new product facility in Solihull and show them the product portfolio over the next couple of years.
What is your next priority?
The next priority is, and not sequentially, launching the Jaguar XE and Land Rover Discovery Sport in North America and to further improve the brand health of both brands, but in particular Jaguar. We have made a lot of headway in terms of appeal and brand familiarity. We have seen some nice improvement, but we now need to improve consideration, and we need to build higher sales. The good news is we have the platform, the basis is there.
How far along are you in getting dealers to agree to buy/sell to increase the number of dual-brand stores? Worldwide, it is being mandated.
We are fully supportive and subscribe to the same strategy. In an ideal world, we would want to have 100 percent brand representation. I cannot tell you how long it will take -- we now have 72 percent. It is increasing every day.
Are there still more dealers looking to buy rather than sell the franchise they don't have?
Land Rover is the pride of the industry, given its profitability. On the Jaguar side, we are not there with profitability. We have exposed our dealers to the future and discussed the future portfolio with them, and after that, they were even less willing to sell.