Generation Why: "We Are Not Scion"

As Mercedes-Benz, BMW and Audi rush to prepare new entry-level product to attract a younger crowd, Jaguar Land Rover is proudly calling “bollocks” on their efforts to attract younger buyers. Although much of the growth in the “near-luxury” segment is expected to come from vehicles with a transaction price in the $30,000-$40,000 range, JLR’s sole offering in that segment is the low-volume LR2. It’s the $50,000 Evoque that’s driving sales for the brand. This interview from Automotive News with JLR’s North American CEO, Andy Goss, explains why:

Most of your competitors are working on vehicles for Gen Y buyers. Do you need to move in that direction?

You should not pigeonhole yourself so much. We conquest customers but we are selling cars that are $40,000 to $80,000. They are bought by people in their 30s and early 40s. Even the average Evoque buyer is 43 years old. The average [Evoque] transaction price is nearly $50,000. We are not Scion.

In my last Generation Why article, there were a lot of good arguments brought to the surface in support of cars like the Mercedes-Benz CLA. For one thing, Mercedes has a very old customer base, especially in Europe. They tend to be buying their last car rather than their first car. Clearly, this is not a sustainable growth path, and will lead to a Buick-like customer base. In that light, bringing in new buyers with a more affordable, more efficient compact vehicle seems like a good call.

In his column this week on the “Scion” remark made by Goss, Peter DeLorenzo strikes a chord that we’ve been playing for a while here at TTAC:

Young people aren’t stupid. They’re brand savvy too – much more so than any brand studies are actually quantifying…

I’ve said that before, perhaps more often than some of our readers have wanted to hear. Among Generation Why buyers, Mercedes and BMW are already sufferng from an image problem. While the parents of today’s college-age consumers still associate Mercedes-Benz and BMW with stratospheric price tags and unique dynamic qualities, the next generation seems them as cars that can be leased by any $30k millionaire becauses they’re too proud to drive a Honda Accord. When you grow up inundated with rap videos and paparazzi photographs showing your celebrity idols driving only the priciest variants of the model lineup, suddenly a four-cylinder small sedan isn’t good enough, even if it has the “right” badge. If you drive a BMW 320i, girls won’t think you’re rich; they’ll think you’re a try-hard.

With Land Rover, on the other hand, JLR has an image that has been so far untainted by associations with low-price leasing or four-cylinder loss-leaders. The Evoque, despite being little more than an Ecoboost Ford in a fancy wrapping, is on fire, with the Halewood plant literally pumping them out around the clock. The new Range Rover is also moving like crazy, simply by virture of it being a new Range Rover. I am positive that the reason people will continue to pay 30 percent more for this car over an X5 or Q7 is because unlike Mercedes, BMW and Audi, Land Rover is not chasing every niche and trying to make their cars accessible to credit criminals and $30k millionaires. Even a car like the Evoque has an older buyer and a much higher transaction price than other entry-level luxury cars. If the Germans are like Ralph Lauren in the T.J. Maxx discount bin, chasing volume and filling every possible niche, then Land Rover is like Richard James: unwilling to make any more product, and sell it any cheaper, than they please.

It’s not all good news for the Tata-held luxury conglomerate, however. Unlike Land Rover, Jaguar has not had the same resurgence. The F-Type should give the brand a solid halo car, and the new XJ is certainly striking enough, but like Audi, Jaguar will probably be an overnight success 20 years in the making. Jaguar is still associated in the public mind with consistent quality problems and misshapen failures of product planning like the X-Type and S-Type. Nor has the public reacted to the new look of Jaguar’s XF and XJ with the approbation it’s given the new look of the Evoque.

With the Range Rover brand, JLR was able to introduce a new, lower-priced model and reap immediate rewards, but that same avenue cannot and will not work for Jaguar; how could you do anything cheaper or less desirable than the old X-Type? Rather, Jaguar will have to build prestige with a long string of desirable, expensive vehicle before they can chase any additional volume. If it’s any consolation, Jaguar’s been in deeper trouble than this in the past and has recovered. There’s something about the Jaguar brand that just won’t quit — and it’s something you can’t get from a Mercedes CLA.