COVENTRY, UK - Jaguar boss Nick Scheele did not waste any time after the introduction of the new S-type sedan at the British International Motor Show in Birmingham. Soon after the unveiling last week, Scheele boarded a plane and flew into the lion's den - Stuttgart to be precise, the home of archrival Daimler-Benz AG.
The Jaguar chief was to visit two German Jaguar dealerships, one in Stuttgart and the other in Duisberg. Scheele, who speaks German fluently, travelled there to give Germans their first glimpse of the new car. Several thousand potential customers who received direct mail invitations were expected at the dealerships.
Scheele is counting on the new 'small Jaguar' to put his company on equal footing with Mercedes-Benz and its E-class in the heart of the mid-luxury market in Germany, traditionally a very tough market for Jaguar.
The new S-type will have to win converts in Germany and a lot of other places if Jaguar is to transform itself from a relatively small maker of upper-range sedans and sports cars into a company that competes head-to-head with Mercedes, BMW and others in lower and mid-luxury segments.
'It will not be plain sailing,' said Peter Schmidt, an auto analyst with Auto Industry Data in Tamworth, UK. 'The executive sector of the market is saturated. That sector is totally dominated by just three models, the Mercedes E-class, BMW 5 series and Audi A6. Those three account for two of three sales. The difficulty Jaguar faces is that those three marques all have traditional strong owner loyalty.'
That is true not just in Germany, but around the world.
According to Jaguar's own analysis, worldwide mid-luxury sales are about 850,000. Of those, 33 percent are in Germany, 25 percent in North America, 8 percent in the UK and 6 percent in Japan.
Jaguar plans to sell 40,000 S-types in 1999 and 50,000 in 2000. Jaguar predicts the USA and Europe will take the bulk of those sales with about 40 percent apiece. The UK alone will take 20 percent, Germany 8 percent and Japan 5 percent. By contrast, Jaguar sold 43,775 XJ series sedans and XK sports cars worldwide in 1997.
Jaguar dealers are spending $2.5 billion worldwide to prepare for the new vehicle, and the company is growing its dealer network.
The greatest push will be in Germany, and it is no coincidence that Scheele's first appearance following the British show in Birmingham was in the two German cities. Jaguar will have increased the number of dealerships in Germany from 67 in 1997 to 111 by the end of 1999. The growth will come mainly from existing dealers opening satellite outlets in adjacent markets. Altogether in continental Europe Jaguar will increase its dealer total by about 35 percent to 300 dealers. Other significant expansions will take place in Spain, France and Italy. In Japan, Jaguar will expand from 47 to 78 dealerships.
The company is making preparations to handle the increase in volume it expects not only from the S-type, but from the X400, the baby Jaguar still in the design process. That car will compete with the BMW 3 series and the Mercedes C-class.
Jaguar has taken pains to be sure its dealer body is ready for the arrival of the S-type, having learned from past experience. When Jaguar launched the XK8 in 1996, it did little to prepare its dealers to handle customer inquiries about the new sports cars.
'When we announced XK8, the existing sales force got drowned,' said Scheele. 'They were in a sense firing from the hip.'
So Jaguar is using direct mail extensively with the S-type. The first mail pieces hit in Europe, where many executive cars are bought on corporate leases, and decisions are made a year in advance.
Jaguar needs to get in on the decision-making process of corporate fleet buyers, and it needs to be ready to handle such customers at its dealerships.
'They need a car like this to help upgrade their dealer network,' said Karl Ludvigsen, chairman of Karl Ludvigsen Associates, a London-based auto industry consultancy. 'The perfect way for that to happen would be to have a car that is moving fast and helps bring dealers up to speed throughout the world. The product will help Jaguar upgrade its dealers and attract new dealers to the network.'
Jaguar dealers will also have to get used to customers they haven't seen before.
'People are going to walk into the showroom in blue jeans,' said Phil Cazaly, marketing director for Jaguar. 'We need to be more welcoming, more tolerant of children.'
The S-type will go on sale in the UK on 24 March, followed by Germany on 26 March, with other countries to follow.
The S-type technical story, Page 17.