Jaguar Land Rover CEO Joe Eberhardt: New Range Rovers to pull dealers through shift

SONOMA, Calif. — The massive investment Jaguar Land Rover made in the Land Rover brand could not have come at a better time. Nearly all of the brand's SUVs are in high demand as the current, waning Jaguar lineup heads toward extinction in less than three years.

First came a new a Defender in late 2019. Then the second-generation Range Rover Evoque arrived a few months later. Other Land Rovers have been given midcycle freshens. This year, Land Rover will replace its two highest-profit vehicles, the Range Rover and Range Rover Sport.

JLR's North American CEO Joe Eberhardt spoke with Staff Reporter Richard Truett on the sidelines of the Range Rover's media debut here. Eberhardt waved off questions about a significant new strategic repositioning plan in the works for JLR, referred to as the Reimagine plan. He said details of that plan are in development. But the outlook for the company's products at hand made for a broad discussion. Here are edited excerpts.

Q: With prices for some models of the new Range Rover topping $250,000, should we think of it as a competitor to the Bentley Bentayga, Rolls-Royce Cullinan and Aston Martin DBX?

A: I think that's a question we should ask our customers. I never believed that a manufacturer should define who the competitors are. I do know that from the cross-shopping, those other cars are under consideration. But we don't define what other cars should be considered. Customers will decide.

With the new Range Rover on sale and a next-generation Range Rover Sport coming this fall, will 2022 be a good year for Jaguar Land Rover — despite the chip shortage and other issues?

Clearly from a product pipeline perspective, we are extremely excited that we are completely replacing the pinnacle of our lineup.

There is a fundamental shift in our business that is interesting to work through. And that is focusing the relationship with our customers and with our retailers on the important issues — in other words, the customer experience, customer service and customer orders that really make for a more complete customer experience. We're having great conversations with our retailers. How do we ensure that we continue and hold on to maintain this positive momentum? I think 2022 will be a good year from a product portfolio perspective and from a business transformation perspective. Of course, the ongoing challenge is the supply situation, and we hope to see that improve gradually over the next couple of months. When that is back to more normal levels, it should be a hugely successful year.

What challenges are ahead for JLR and the industry?

I guess the challenge for us and the industry will be to keep that discipline and not go back to the sins of the past that we all know and struggle with — building cars that are not to market specification, not to customer needs. Building too many of them. Having inconsistent processes. Having a negotiation-based sales experience, which is the opposite of what you want for a positive customer experience.

You really battled to get the third row of seats in the Range Rover. Now that it's here, do you have a sense of how Range Rover customers are viewing this new interior option and what its order rate might be?

We have had customer preview events before the car went on sale. There was a lot of excitement. Anecdotally, we have heard, "That's what I've always wanted."

We anticipate a 60-40 split between the short wheelbase and the long wheelbase and the majority of long wheelbase will be ordered with the third row.

I think at a minimum, the three-row car will account for 40 percent of sales. But it could potentially be higher, just because it is so nicely executed. When the customer doesn't need the third row, there's the extra luggage space. It's the most usable of the variants.

With the Jaguar XJ sedan retired and the new Range Rover so composed and quiet on the road, do you think XJ customers will consider replacing their cars with the new Range Rover?

There is no compromise anymore. It used to be SUVs did not provide the same ride comfort and quality as a sedan. That compromise is no longer there. I would say the Range Rover is an alternative to not just the XJ, but to any sedan.

For many years, we considered the competitors to the Range Rover not just the other luxury SUVs, but luxury sedans. So, yeah, I think the new Range Rover is a huge opportunity, whether the customer is driving an XJ, S-Class or 7-Series.

The new Range Rover is moving up in terms of price, size, technology, luxury and about a dozen other attributes. Does the new, smaller Range Rover Sport essentially take the place of the outgoing Range Rover?

I wouldn't see the Sport being the vehicle for the prior Range Rover customer. The Sport will retain and maintain its own personality. It is a more dynamic, driver-focused car. It won't grow that much in size. The focus will always be on that engaging driving experience. Which is different than what we are doing with the Range Rover.

With the chip shortage and the war in Ukraine hampering production, do you envision having enough Range Rovers to fill orders this year?

How do you define "enough"? We have around 11,000 orders. I don't think we'll have anything [unsold vehicles] on the ground for the foreseeable future.

We are ramping up production now. I think we will eventually have a good supply, but that depends on our ability to procure the parts needed and how quickly we sell what's coming. It's a good problem to have.

Will dealers have at least one demo vehicle on hand?

The next couple of months will be difficult. We are selling every Range Rover we can get. But we are working with our retailer partners to ensure they have a vehicle to test drive and for demonstrations.

We need to be able to showcase the drive, and this is still a business where customers need to see, touch and feel the vehicle. By the end of this year we should be in a good place.

In the Range Rover's press introduction and media drives, no mention was made of self-driving features. Some competitors, namely the Cadillac Escalade, already have advanced self-driving capabilities. Is this an oversight?

We have Level 2 technology, and we've had that for a while. I don't have the exact usage data, but I think the majority of our customers likes to focus on driving. And they see assistance as support, not to take over the driving.

Personally, I think that's the future. I don't think we will see full autonomy in personal vehicles anytime soon. There are still too many open questions in terms of legislation and insurance. I am not anti-technology. I think it will find its way, but I am not sure we need to be a leader in that particular field.

Land Rover has created an immense palette of custom interior trims and colors for the new Range Rover. Since there is virtually no inventory on the ground and customers are going to wait for their vehicles anyway, is Land Rover encouraging bespoke orders?

Very much so. But we start with configuring the vehicle with what is available in our regular production system. Bespoke is the next level. That's a huge opportunity in terms of getting customers engaged with the brand to a much greater degree. It's a much deeper relationship when you actually sit down with a client concierge and think through, configure and order a vehicle you really, really like, as opposed to choosing one sitting on the lot.

That is one of the very few positive aspects of the current situation. There's a bit of a trade-off. Customers have to wait two or three months, but they get the car they really want.

What's the plan to keep lease customers from leaving the brand if they can't transition out of their current Rovers into the new one?

We're extending current leases up to 12 months, and we are talking to our financial services partners to potentially go beyond that.

Other than tight supplies of hot vehicles, what's keeping you up at night?

We are starting to see inflation impact our business in direct ways related to material costs. And then our customers are affected by the general cost of living.

And interest rates. We don't know where those are going. So there are definitively worry beads out there in terms of economic doubt.

The transformation into new forms of transportation — electrification, autonomy, connectivity — and working through that in a customer- and retailer-centric way is the most important issue. It's a huge opportunity but it also will require some transformative and brave changes.

So we are working with our retailer council and our retailer cabinet to come up with collaborative solutions that help both of our businesses and ultimately provide the best luxury purchase and ownership experience for our clients.

So yes, it is supply, but how do we make use of the current crisis and use it as the spark for a business transformation?