Jaguar Land Rover is betting the future of its Jaguar brand on a new family of entry-level luxury vehicles to challenge BMW, Audi and Mercedes-Benz.
The new vehicles, which will start with a compact saloon in 2015 and include a crossover SUV and estate model, will be based on an all-new platform architecture, the first fully designed by JLR under the ownership of India's Tata Motors.
The new models will move Jaguar into the fast-growing and lucrative luxury compact and SUV segments that are far outpacing overall premium sales and give it more firepower in the Chinese market, where Land Rover’s cheaper models, the Evoque and Freelander are the company’s best sellers.
The vehicles will allow Jaguar to compete with the likes of Mercedes-Benz’s C-Class and BMW’s 3-series, targeting customers looking to step up from mass-market brands without paying luxury manufacturers’ hefty premium.
The vehicles will be made from aluminium on production lines under construction at the company's Solihull plant in England, previously used solely to manufacture Land Rover models, creating about 1,500 jobs, people with knowledge of the plans told the Financial Times.
“This is a massive leap forward for Jaguar,” said one person briefed on the developments, who declined to be identified as the plans have not yet been made public. “It’s the big investment that the brand desperately needs.”
JLR has seen sales and earnings boom under Tata's ownership, mainly thanks to Land Rover, while Jaguar - seen as the less attractive of the two by the Indian conglomerate during its buyout talks with previous owner Ford - has struggled to match its sister brand's success and profitability.
The substantial new investment in Jaguar, which will account for a significant chunk of JLR’s increased annual £2.75bn capital expenditure budget, is viewed internally as a long-overdue shot in the arm for the brand that will widen its global customer base.
Reinvigorating Jaguar and its initiative to develop its own, in-house engines are the two big challenges for JLR in its aim to leverage the remarkable bust-to-boom transformation under Tata over the past few years into a long-term growth story.
A spokesman for the British carmaker declined to comment. The company is expected to provide more details on the plans in September at the Frankfurt Motor Show, people said.
Copyright The Financial Times Limited 2013