Autocar’s group tests compare models likely to be shopped together. Jaguar Land Rover, however, has a suggestion: rather than a Mercedes, a sofa would be more relevant.
The reality today is that Range Rovers in particular have moved so far upmarket that JLR is competing with upmarket sofa companies and other luxury purchases for “share of wallet”, JLR's chief commercial officer, Lennard Hoornik, explained to investors recently.
“It means that people do not say ‘I'm going to buy a BMW or a Mercedes or an Audi’ but say ‘maybe instead of buying my new sofas in my house I'm going to get a Range Rover’,” Hoornik told the assembled financial analyst crowd in Gaydon last month.
To be clear, he’s not talking DFS sale items here, but more like the bubbly £70,000 Louis Vuitton Bomboca. These are seriously wealthy people.
The average selling price of JLR products has increased to more than £70,000, up from below £45,000 in 2019, Hoornik’s slide deck showed.
JLR sales are now dominated by the “big three” high-profit SUVs of the Range Rover, Range Rover Sport and Defender. Between them they accounted for 59% of the firm’s 111,180 retail sales globally in the three months to the end of June. However, the three models accounted for 85% of JLR’s “value”, CEO Adrian Mardell said at the same event. He didn’t clarify whether value meant revenue or profit, but either way their importance to JLR eclipses all other models.
So much so that this year JLR will axe five models – all Jaguars – that do little for the bottom line. “They're all close to zero-profitability products,” said Mardell.
Only the Jaguar F-Pace SUV will survive into next year ahead of Jaguar’s remake into a luxury brand selling only EVs. The loss of cars like the E-Pace will mean JLR’s average selling price is about to make another big leap.
Selling to people with the spare cash to allocate to a luxury SUV or designer furniture is very different from the “mass premium” market that JLR now says it has left for good. “It's not so much about propulsion. It is very much about desirability,” said Hoornik.
Obviously the work going into the cars themselves to make them appealing, reliable and capable is even more important when you are perhaps spending double on the same product you were 10 years ago. But at this price point you have to work harder for customers to part with the money in the first place.
Regular dealers, for example, can’t be the only physical touchpoint. Each of the four brands – Defender, Range Rover, Jaguar and Discovery – will have a network of independent showrooms to supplement more regular outlets.
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