Joe Eberhardt, 56, Jaguar Land Rover's North American CEO, spoke this month with Staff Reporter Richard Truett about Jaguar's challenges and other issues. Here are edited excerpts.
Q: What does the future look like for the Jaguar and Land Rover brands in North America as technology changes rapidly and competition in the luxury segment increases constantly?
A: We have probably one of the most competitive lineups we've ever had. We will continue expanding both brands, and that includes battery-electric vehicles and plug-in hybrid vehicles. Our corporate vision is that starting in 2020, each of our new model lines will be electrified in some way, giving our customers more choice.
Combined sales of both brands in North America have grown for 10 consecutive years, and the region is once again the largest for Jaguar Land Rover. If you can get enough Defenders, will 2020 keep the winning streak going?
It's tough. We were hoping 2020 would be another record year, but the challenge has gotten so much bigger. Nobody was planning for a global pandemic to hit us and to have the impact it has had.
The market was already challenging and struggling at the beginning of the year in North America. Then COVID came on top of that. As a result, global sales were down 31 percent for the fourth quarter (JLR's fourth quarter ends in March) and 12 percent for the full fiscal year.
It's tough to forecast where we will be. In North America, our sales were off 50 percent in April, 20 percent in May. Let's see how June shapes up. If it finishes the way it has been developing, I would be even more cautiously optimistic that the market is coming back quicker than we expected.
JLR's plants were down for nearly two months. What effect is that having on some of the vehicles that are in high demand, such as the Range Rover Sport, Evoque and Defender?
Supplies will be somewhat constrained over the next couple of months. We were down and we are now ramping up slowly. We'll do our best, but I think we will be inventory challenged in the near-term future for sure, particularly for our bestselling SUV, the Range Rover Sport.
What about the rest of the lineup?
If you look at where demand has developed in the marketplace, clearly SUVs [and crossovers] are currently stronger than ever with between 65 to 70 percent [in the North American luxury market].
That shift in the marketplace bodes very well for our SUV lineup on the Land Rover side and on the Jaguar side. That's where I would expect certain shortages in the short term. But on the sedan and sports car side, because of the shift in the marketplace, we definitely have good inventory coverage at the moment.
Speaking of cars, I asked a few dealers about the state of their business. One of their top concerns is being forced to take cars that may not be right for their markets. What's the story there?
If you talk to every dealer for any brand, at some point there is going to be an imbalance in inventory, which results in retailers being asked to take cars that, ideally, they wouldn't want. We were in such a situation, and we were trying to work through it and solve it. The shifts in the market were of a speed and a degree that none of us really anticipated.
As a result, you have some cars that are probably not ideal for the situation. But they are built, and they are in inventory and they need to go somewhere. That resulted in a bit of an adversarial relationship because, you know, as a manufacturer, we had to find homes for those cars. It is nirvana if every car is an absolute home run and if we accurately anticipate the exact demand for every vehicle. Then there wouldn't be that issue.
We have with our new retailer cabinet agreed that we will have a joint approach, where we try to build spec cars. Together with a subcommittee of the retailer cabinet, we are hoping to bring them closer to the decision process, so we get direct retailer feedback into the build process so that we are sure to get it as right as possible.
Jaguar is actually transitioning in two ways, from cars to crossovers and from traditional engines to electric powertrains. Doesn't that present a lot of challenges?
Quite frankly, the shift away from sedans and sports cars and coupes to SUVs has impacted our sales to the point where F-Pace is by far our bestselling car, and one of the bestselling ever for the brand, 15,000 units annually. We've made the announcement that the next XJ will be electric. We now have to make sure that we go back to the core Jaguar DNA to make it clear that the brand has its own path forward. We are focusing on interior design and driving excitement and performance. And those are areas where we do have leadership.
We have to do a better job marketing the brand than we have in the past. It is a very unique and extraordinary luxury brand and we need to communicate that to customers more effectively. Jaguar may not be the car for everyone.
It is a car for people who want to stand out. For those looking to differentiate themselves, I think Jaguar will be the choice. That's the notion and thought we have to get across. But it will take time to make that shift.
What lessons have you learned from marketing the battery-electric I-Pace?
Clearly every automaker right now that isn't Tesla is facing a challenge on how to position their electric vehicles appropriately. It is a real challenge to get across to the more general market what a great car I-Pace really is.
It is not helped by the external circumstances. Gasoline is at an all-time low. If you drive 15,000 miles a year, you aren't spending a lot of money for gas. So the savings you get from the electric powertrain doesn't necessarily offset the increased cost of the vehicle.
The second challenge for all of us, the residual value, is still a very big concern. No one really knows what the market value of a used electric car will look like three, four or five years from now.
The charging infrastructure is not clear. We are getting slowly over the range anxiety issue.
What's your outlook on the market for EVs?
The audience for EVs is growing but maybe not to the degree that we as an industry and us in particular expected.
We are not completely disappointed with where we are with I-Pace, but I guess as good a product as it is, we were hoping for a little quicker adoption.
I still believe going forward it is the powertrain of choice for performance brands. And as other cars from other manufacturers join, it will become clear. But it is a longer journey than we thought. Some of things we have learned with I-Pace, we certainly will put into play as we launch XJ.
What would an Automotive News interview be if we didn't try to get you to make news? Tell us about the next-generation Range Rover. Is it going way upmarket?
We sold almost 20,000 Range Rovers in the U.S. last year. It is going stronger than ever. That number is so phenomenal considering the fact that the market is so much more crowded now with lots of new competitors. Everyone is trying to get a piece of that market. We are holding our own. That is the car that made the brand.
You know we don't speak about future products, but I can guarantee you that the next Range Rover will continue the legacy of the outgoing model and will continue to set segment benchmarks in every conceivable way.