Jaguar: Appealing to hearts as well as heads is key to fleet business

Ingenium engines and aluminium architecture are crucial to JLR’s sales success, according to Jon Wackett

Jaguar Land Rover’s sales surge in the fleet market has been put down, in part, to developing its Ingenium engine range.

The family of low-friction, high-performance petrol and diesel engines were launched to meet growing customer demand for lower fuel consumption and cost of ownership.

They are being made at the company’s new £500 million engine manufacturing centre in the West Midlands, which is able to produce 450,000 Ingenium engines each year.

Fleet customers would have initially seen them in the Jaguar XE, launched in April 2015, quickly followed by the Discovery Sport.

Jeremy Hicks, managing director of Jaguar Land Rover (JLR) UK, believes their introduction was key to achieving record-breaking registrations last year.

He told Fleet News: “Having our own engines delivering great fuel economy and CO2 performance, and controlling and having a more significant say over our powertrain, has been very important.

Hicks also said that the aluminium intensive nature of the architecture, which supports lightweight construction employed across the whole range, had proved vital.

JLR’s total fleet registrations were up 50% last year, with the manufacturer registering 21,034 units compared with 14,056 in 2014. Jaguar registered 6,562 vehicles to fleet – up 49% year-on-year – and Land Rover fared even better, with 14,472 units registered, compared with 9,659 in 2015 – an increase of 67% (Fleet News, June 9).

It has meant a substantial shift in the split between retail and fleet registrations. Jon Wackett, general manager for fleet and business at JLR, said that 37% of its registrations in 2013 were in fleet and business, with the remaining 63% in retail. However, two years later that had grown to 44% – almost half of JLR’s registrations – in fleet.

Looking at its sales figures for last year in more detail, contract hire and leasing business across all manufacturers grew by 23%, while JLR achieved a 75% upturn in business. Results for Q1 showed that trend continuing, with the market up 11% compared to a year-on-year increase of 115% at JLR.

Fleet News: How have you ensured this success was seen in corporate registrations as well as retail?

Jon Wackett: Firstly, you have to look after your customers. If you don’t, you don’t have a business. Customers also buy in two ways; they have a very rational mind-set and they have a very emotional mind-set, so if you’re talking to a fleet manager they will want beautiful cars that their employees want to drive – retaining and attracting new people – but they also want them to stack-up financially.

It has been the manifestation of five or six years of planning, design and engineering. It has got us to a point where we can represent and sell cars like the XE with 99g CO2, XF at 104g/km and Evoque at 109g/km. We’ve now got a portfolio of products where we can cater for the chairman all the way down to the junior manager, where previously we didn’t.

We started to see it improve over the last two to three years and then with the arrival of the Ingenium engines that opened up the market for us. Those levels of CO2 affect writing-down allowance, benefit in kind, vehicle excise duty and Class 1 National Insurance, so the whole proposition works, not just at an acquisition price but at taxation levels as well.

We’ve really disrupted a market that has been traditionally dominated by three or four brands by introducing extremely desirable cars that represent real-world value for money.

FN: Did you envisage that JLR would have such an impact on the market?

JW: It was not a total surprise to me, because you know the market size, you know the sectors, you know the price points, you know the monthly payments. You know if you have a highly desirable car – the heart – and you get the rational piece right, it’s going to take some share.

FN: How do you balance volume and exclusivity?

Jeremy Hicks: If you look at the proportion of total market occupied now by the premium brands and you go back over the past five years, it has just grown and grown; there’s been a flight to premium. But are premium volumes seen as ‘volume’? I would argue not, because drivers don’t understand market share. I don’t think customers think in volume and premium quite in the way we do.

FN: What about the impact of volume on residual values?

JW: We are strategically aiming to balance volume of sales against maintaining strong residual values, which is a core buying decision for our existing and future customers.

FN: How have the changes at JLR impacted your dealer network?

JH: We changed the face of the company so the face of the UK dealer network needed to change. We’ve now moved to a place where in most of the towns and locations we have one owner of both brands and, if at all possible, we’re going to put them under one roof – Jaguar and Land Rover – because we’ve found the brands do sit really well together. It didn’t seem natural two or three years ago; now it does.

FN: What are your expectations for F-Pace in the corporate market?

JW: We would expect corporate F-Pace to take about one sixth of total volume. We think we’re being prudent about what our expectations are; F-Pace is an executive car, it doesn’t start at a level of Discovery Sport and Evoque, and therefore you would not expect it to do the same sort of volumes.

However, it’s a great entry car for Jaguar to the SUV market and we’ve got a lot of interest coming from a lot of different customers. You’ve got middle-management who have not previously considered a Jaguar. It’s provided another route to having a conversation about the portfolio. It’s a fantastic door opener.

FN: Does JLR have any plans to introduce hybrid or fully electric vehicles?

JH: We’re exploring alternative drive technologies. We will come to market with them, but we haven’t said which brand or with which car. But, the market isn’t that huge at the moment. It is the absolute minority of the market, rather than the majority, but that is going to change and we will have to change and make sure we have the offering in line to capitalise. However, the progress that has been made with the internal combustion engine over the past 10 years has been phenomenal. In fact, we’ve CO2 down below 100g/km; we’ve got NOx reduced by 80% from levels they were 10 years ago. There’s still a role for the internal combustion engine. You will see changes, but it will be a blended technology approach.

In the meantime, JLR has launched InMotion, a new technology business that aims to build apps and on-demand services to overcome modern travel and transport challenges.

The manufacturer will provide technological and financial support, but the wholly-owned subsidiary will be free to plot its course, allowing it to respond quickly to the fast pace of the mobility sector.

It began real-world testing in April of a number of different services such as car sharing. JLR says that, with technology changing the way people travel and providing access to vehicles at the swipe of a screen, more people are looking for ways to improve their commute to work or to access the car they want.

InMotion aims to combine the best of the automotive and technology sectors to develop new solutions accessible via smartphones or other connected devices.

But when will the new technology start-up start delivering products that can be used by fleets and company car drivers? Wackett couldn’t provide any detail, simply saying that “they are testing out various transportation offerings to see what the consumer may want now or in five years’ time”.

Judges’ comments

“The XF takes Jaguar’s product offering to a whole new level. Well equipped, great to drive, outstanding interior quality and spacious for front and rear passengers – it has high appeal for drivers while the low running costs make it the perfect executive car to have on the fleet.”