Land Rover Going All Over?

It’s earned rugged reputation for its ability to tackle almost any terrain. But with the addition of the new Freelander, Land Rover is about to face its biggest challenge yet.

Introduced in Europe in late 1997, the compact SUV is only now making it across the Atlantic. The Freelander will enter one of the fastest-growing segments in the U.S. market—and also one of the most competitive. The British marque will be going up against well-established light truck nameplates, such as Jeep and Chevrolet, as well as aggressive Asian entries from Toyota, Honda and Nissan.

Land Rover’s aspirations are wisely modest, industry analysts say. But the company sees Freelander as the first wave of its planned assault on American shores. If all goes according to plan, Land Rover expects to sell 20,000 Freelanders a year in the States, “which will instantly make North American our biggest market in the world,” notes Bob Dover, the company’s amiable chief executive.

Currently, the company accounts for just 0.18 percent of the U.S. market, so even with Freelander, it will still be little more than an asterisk on the sales charts. But relying on the resources of its parent company, Ford Motor Co., Land Rover is aiming for significantly more growth in the years, and it’s got a model that suggests that’s possible. A decade ago, Jaguar was selling barely 25,000 sedans, coupes and convertibles a year in the U.S. But the resources of its parent, Ford Motor Co., it has been adding an array of its own new products, such as the new X-Type. And by mid-decade, Jaguar hopes to push the 200,000 mark.

Mass marketing

“Land Rover will never go mass market,” emphasizes Howard Mosher, the soon-to-retire head of Land Rover’s U.S. operations, but the Freelander will move it a significant step closer to mainstream. And that’s just the beginning. In Land Rover’s first 53 years, it introduced a total of seven new products. Within the next five years it has six more on tap, including the new compact SUV.

The success or failure of that strategy will weigh heavily on Ford Motor Co., which acquired Land Rover in March of 2000 for nearly $3 billion.

For a half-decade prior, the SUV maker had been a subsidiary of BMW AG. The German automaker had invested $6 billion in a failed attempt to broaden its own lineup. When BMW finally abandoned its British foray, it sold off its Rover passenger car operations and Land Rover sport-ute division, keeping only the Mini brand.

Ford Chairman Jac Nasser justified the purchase of Land Rover as an opportunity to expand his company’s presence in the global luxury market. Auto analyst J Ferron, of PriceWaterhouseCoopers, agrees the acquisition created a tremendous opportunity—but also posed significant challenges: “Success will depend on how they bring Ford technology and quality into the Land Rover line.”

Despite its rugged image, Land Rover has routinely slumped to the bottom of the J.D. Power Initial Quality and Customer Satisfaction surveys. In years past, owners were willing to accept endemic problems, but in today’s market, customers have become more picky than ever. They’re not only demanding better quality, but state-of-the-art technology.

Dover all over

And so, since the acquisition, Ford has invested about $200 million in cash and significant design and engineering resources, naming Dover, the well-liked former head of Ford’s Aston Martin brand, to pull the Land Rover unit into shape. To resolve long-standing problems, a 200-person quality team has been assigned to Land Rover, says Dover, “the biggest at Ford.”

Just last month, Ford announced plans to combine the U.S. operations of its three British brands into one super-group. “To be successful in the premium market, you need to be able to offer a broad range of vehicles,” explained Mike O’Driscoll, currently head of Jaguar North America, and soon to be president of the new Aston Martin Jaguar Land Rover Group. “With all three British marques operating together, we will start to achieve the critical mass required to compete head-to-head with other premium car and truck manufacturers.”

The consolidation will not extend outside the U.S., though that is an opportunity Ford is expected to consider in the future. In Japan, for one thing, it could provide a critical opportunity for Land Rover, which lost much of its dealer body following the sell-off by BMW. Wherever possible around the world, insiders suggest, Ford will pair up the British brands, though they could also be partnered with other marques, such as Volvo or Lincoln, that collectively make up Ford’s Premier Automotive Group.

Underlying the new British group strategy is the decision to keep each of the three marques focused on what they do best. Jaguar, for example, will not need to add any light trucks to its line-up, while Dover says Land Rover will continue “doing what we do best,” building SUVs capable of handling the roughest off-road trails.

Land Rover’s retail strategy is designed to enhance that image. A growing number of dealers have set up off-road courses where potential customers can test their skills and the capabilities of the brand’s products.

Adding the Freelander to the lineup “makes us more accessible” to buyers, says Jon Williams, the marque’s director of North American marketing operations. Even with its modest sales aspirations, Land Rover hopes to raise the bar among competitors, setting itself as the aspirational brand. If it can deliver the goods, says analyst Ferron, “It has the really large potential to become a serious niche player.”

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