In the world of hood ornaments, the Jaguar brand may take first prize for artistry. The big leaping cat that rises from the front ends of many Jaguar models embodies the image the firm wants to project for its cars -- sleek, fast, desirable. and yet elusive. In other words, a Jaguar is not obtainable by everyone. That image has been tarnished a bit in recent years, but it looks like Ford Motor (NYSE:F), which controls the brand, is taking steps to restore Jaguar to its old perch.
For years Jaguar played on exclusivity to command high prices and a loyal following. Unfortunately, Ford succumbed to a temptation back in 2001. The giant automaker moved to broaden the base of potential Jaguar buyers with cheaper models. It's not a particularly unique idea. DaimlerChrysler (NYSE:DCX) offers lower-priced Mercedes models, while General Motors (NYSE:GM) has been expanding its Saab nameplate with lower-priced vehicles built in partnership with Subaru.
As it turns out, the strategy didn't work particularly well for Jaguar. The unit posted $1.1 billion in losses in 2003 and probably lost substantial sums in 2004 as well. Thankfully, Ford is acting to restore the pride of the Jaguar brand, according to USA Today. Ford will eliminate the lowest end X-Type Jaguar models and is cutting incentives on other X-Types.
At the same time, Ford is by no means giving up on the Jaguar brand. The U.S. automaker plans to offer some more expensive X-Type models and is reportedly considering recapitalizing its Jaguar unit with a $935 million investment.
While the failure of Ford to generate higher sales from Jaguar is a disappointment for its investors, the automotive giant has learned a valuable lesson. When one tries to offer too much of a good thing, that good thing can go bad. The sooner Ford completes its course reversal and re-establishes Jaguar's reputation as a breed apart, the better off Ford will be.
Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
