Jump to content
Sign in to follow this  
Variance

Jaguar to increase resale value

Recommended Posts

Jaguar to increase resale value

No more fleet sales and stronger product offerings are top priorities

By MARK RECHTIN AND ARLENA SAWYERS | AUTOMOTIVE NEWS

AutoWeek | Published 02/27/06, 8:39 am et

Jaguar this year will reduce sharply the number of used vehicles coming back from leases and fleets. But the underlying weakness of the brand - mostly the result of limited product offerings - continues to hurt the residual value of Jaguar's vehicles.

In 2004, Jaguar Cars North America had to remarket 20,000 vehicles. Last year that number soared to 27,000, mostly X-Types and S-Types coming off lease. That glut of used cars was equivalent to 89 percent of Jaguar's total new- vehicle sales in 2005.

The remarketing pressure will ease a bit this year, with about 21,000 units expected to return, said C.J. O'Donnell, Jaguar executive vice president of marketing.

"This year will be a walk in the park compared to last year," O'Donnell said.

Jaguar also is walking away from its fleet business. It stopped selling cars to Enterprise last year and will end deliveries to Hertz in the second quarter, O'Donnell said.

In 2004, the most recent R.L. Polk registration data available, about 15 percent of Jaguar's sales were to fleets, or about 7,000 units.

According to Automotive Lease Guide, brands that return fewer cars for remarketing in any given year usually are rewarded with higher residual values.

Despite Jaguar's efforts, Automotive Lease Guide has chopped Jaguar's sales-weighted 36-month residual value from 44 percent last year to 40 percent this year. That's largely a factor of the brand's limited product lineup compared to such better-equipped rivals as Lexus and Mercedes-Benz.

Although the XK coupe and convertible arriving this spring will add some pizazz to the lineup, it's not enough, said Raj Sundaram, president of Automotive Lease Guide.

"Jaguar doesn't have that much to offer," Sundaram said in a telephone interview.

"Lexus and Mercedes have a slew of vehicles, but Jaguar doesn't really have much to talk about."

Although Jaguar took care of its remarketing challenges in 2005, he added, "It needs to offer a product portfolio they don't have yet."

O'Donnell counters that more new product is on the way, including a redesigned S-Type due in spring 2008.

"What we have done has helped dealers. We have to keep an eye on our lease mix and fleet business," O'Donnell said. "But there are other elements that dictate residual values."

Helping to support the brand's residuals is the fact that many used Jaguars have low mileage, said Ricky Beggs, editor of auction tracker Black Book.

Beggs said many of the cars are second or third cars for their owners, a fact that tends to keep mileage low. Although most 4-year-old cars have been driven more than 40,000 miles, many off-lease Jags have mileage under 20,000 miles.

As a result, the cars sell quickly at auction at prices up to $4,000 higher than vehicles with higher mileage.

And that's just for the cars that made it to auction. O'Donnell said Jaguar dealers typically retain half of their off-lease cars at termination, and Jaguar will help them retain as much as 80 percent.

He said: "We can keep them out of the auction's hands and let dealers take a second crack at making money on a used car."

Link: http://www.autoweek.com/apps/pbcs.dll/arti...E/60227004/1041

Share this post


Link to post
Share on other sites

Your content will need to be approved by a moderator

Guest
You are commenting as a guest. If you have an account, please sign in.
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoticons maximum are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  



About us

CheersandGears.com - Founded 2001

We  Cars

Get in touch

Follow us

Recent tweets

facebook

×