January 2015 | Christabelle Noronha
'North America is a critical market place for JLR'
Joachim Eberhardt, the president and chief executive of Jaguar Land Rover North America, fell in love with cars as a child and has spent more than three decades working among them. He has delivered success stories for the Chrysler Group and Mercedes Benz in both the US and UK. Jaguar Land Rover (JLR) has a powerful presence in the North American market and has registered substantial growth over the past few years, thanks to its iconic Land Rover models and stunning Jaguar variants such as the XK series and the F-Type coupe and convertible.
Mr Eberhardt, who took charge as chief executive in December 2013, opens up in this interview with Christabelle Noronha about the critical importance of the North American market, the defining trends of the automotive business and JLR’s evolution under the Tata umbrella.
Where does the United States figure in Jaguar Land Rover’s business matrix? How has the market changed for the company since the Ford era?
North America is a critical marketplace for JLR. It is a strategic priority for JLR to be competitive in this market. From an industry standpoint, the United States is the second largest market in the world after China, and is especially influential in terms of global luxury consumer trends. Once the Tata group took over the business, it reemphasised the importance of the North American market for the future of JLR and has made significant product investments in this business as a result. From a manufacturing standpoint, traditionally JLR had only been manufacturing in the United Kingdom, but, of late, we have expanded our global manufacturing footprint. We recently entered into a joint venture with Cherry in China to make products locally for the Chinese market. We are about to open operations in Brazil and we have set up our first local assembly facility in India. Overall, we are becoming much more global as a business and as a manufacturer.
I cannot speak about the Ford era because I was not part of the organisation during that period. But colleagues who have worked through the multiple ownerships feel thankful for the confidence that Tata has in Jaguar Land Rover and the investments made during difficult times — especially during the financial crisis in 2008 and 2009, when the company was going through a challenging time. It would have been easy to scale back at the time, to not invest and just try to maintain what was there. But Tata did just the opposite — it invested further, allowing us to build a product portfolio and enhance our brand strength that has become the engine for growth. Today the company is enjoying the benefits of those investments as our newest products have been extremely well-received.
How are each of the brands received in North America?
They both have a hold on the market based on their own merit and have many passionate followers. Land Rover has always been very strong in North America because of the SUV product portfolio which aligns very nicely with the local market trends. About half of all vehicles sold in North America today are sports utility or crossover vehicles. Land Rover holds a very unique position in the marketplace as a dedicated premium SUV brand.
|Watch how the dynamics of the American market has helped Jaguar Land Rover build a diverse product portfolio|
With the introduction of the Jaguar XE sports sedan, which goes on sale in 2016 in North America, and other potential product additions, we intend to grow Jaguar’s footprint in the marketplace.
What are the challenges for companies in a mature market such as the United States? Are there challenges unique to the continent?
The United States is probably the most competitive market in the world. All global manufacturers are represented here, and there is a strong domestic luxury segment and industry. Asian luxury brands — such as the Lexus and Infiniti — that do not factor as much in Europe, have a strong hold on the luxury market here. Overall, the North American consumer has more choices and the highest levels of expectations for customer service. It is this level of competition which keeps prices in check. We are well positioned to compete in this environment as we have two unique iconic British brands, a product portfolio that is competitive and continues to grow, and a customer experience that allows us to differentiate and set ourselves apart from other mass, luxury-oriented competitors.
What about the dealership trend in North America? Do you have dealers exclusive to Jaguar and Land Rover?
We are focused on delivering a customer retail experience that is exclusive to our two brands, and today the majority of US retailers do offer a dedicated JLR experience. In terms of numbers, we have 330 franchises between the two brands in North America. About 70 percent of these franchises are housed in dealerships that offer both brands in one facility. In Canada, where many of the retailers are newer, 100 percent of the dealers represent both brands in exclusive facilities. Our retailers have been investing in their businesses. Our goal is to increase the joint representation for both brands.
How do sales and revenue in North America compare with the rest of JLR operations worldwide?
North America is one of the five global regions of JLR. Our corporate goal is to have a balanced market portfolio without over-relying on any one geographical region. Sales comparisons are different depending on which product categories you look at. For example, the Range Rover Evoque is the company’s best-selling model across the world. Yet in the US, the best-selling model is the Range Rover Sport. The US tends to be the regional leader in the premium SUV and sports car sectors. Long-term, we certainly think this region has huge growth opportunities as it is a stable market with a lot of positive macro indicators.
How much influence does the United States market have in defining trends in the automotive industry?
The United States has been a trend-setter from various perspectives. In terms of product development, a lot of categories were innovated here. For instance, the minivan was pioneered in North America through Chrysler; the SUV originated and first became popular in North America and, without a doubt, global brand trends are set here.
But North America is different from the rest of the world in terms of product requirements. Everything is bigger here — the size of the vehicles, the engines, etc. On the other hand, in Europe, the trend is downsizing of vehicle body styles, sizes and engines.
Another area where North America sets trends is on the marketing front. A lot of the social media applications originated here. Many innovative marketing techniques and technologies come from North America. So we need to be in the forefront of those developments to make sure that we continue to be aligned with customer needs.
How has Canada grown as a market compared to the United States?
Canada is about a tenth of the US market. Over the last two years, the JLR business has grown faster than the overall market growth. We are gaining share in Canada, as we have done in the United States. Canada is an absolutely important and integral part of our growth strategy.
How has the JLR marketing strategy been adapted for the United States market?
The overall marketing strategy and brand positioning is the same globally. The brand statement is applied to fit local needs and requirements. It is important as a global company that you have brands that are recognised for the same values globally, no matter where you are. It is the breadth of capability, the ‘go anywhere, do anything’ attitude that embodies Land Rover and the seductive performance that personifies the Jaguar. We take that as the platform for our local marketing activities. It is just as important to be able to activate the brands’ marketing strategies in a locally relevant manner. The companies that do that best have the most success.
Could you elaborate on JLR’s skill building initiatives in North America?
We have around 300 employees at the company level, and roughly about 7,500 individuals that work with our retail partners. We are working with our retailers to find ways to meet their needs on both the sales and service sides of the business. On the OEM side, we do whatever we can to invest in graduate programmes, skill building programmes, etc. We partner with institutions to help us attract and retain the best talent in the business. Lastly, we as an organisation are committed to improving our training both internally and for our retailers so that we are a constantly learning organisation. In fact, we have been investing in our training facilities and have just opened a new training facility and western regional office in Orange County, California.
Remaining sustainable is essential to the existence of the automotive industry. How has JLR tackled the issue of sustainability?
JLR is fully aligned with the overall sustainability trends in the industry, particularly in the areas of efficient manufacturing and more efficient products. Our facilities use less energy and create less waste than ever before. From a product standpoint, Jaguar Land Rover is a recognised leader in the use of lightweight and recyclable aluminum in its vehicles. Lighter weight, and recycled materials lower the environmental impact of a vehicle throughout its life. Further engineering solutions are being developed including the most advanced powertrain options, smaller vehicles and engine downsizing. What is just as important is what we can do with our dealer network to make sure that they follow the latest technologies in terms of energy consumption, environmental sustainability, how they treat waste materials, how they dispose of toxic chemicals, and so on. There are many areas where we can become industry leaders in terms of doing the right thing for the environment.
In terms of corporate social responsibility, we are fully aligned with Tata’s values and have a number of North American initiatives under the global JLR corporate social responsibility umbrella. We have focused our activities in the US on a number of large-scale programmes related to child well-being, such as the New York-based Children’s Health Fund and the California-based PS Arts organisations. We are looking at public health and arts as the two areas where we can contribute and give back to the community.
Fact file: Jaguar Land Rover