Jaguar Land Rover thinks sedans will be popular again one day.
We all know that sedan sales are falling and demand for crossovers is booming. As a result, Ford is abandoning the passenger car segment altogether apart from the Mustang, and General Motors recently scrapped six sedans from its line-up to focus on SUVs.
Jaguar Land Rover, on the other hand, is stubbornly sticking with sedans for the foreseeable future, despite disappointing sales in the segment. Declining sedan sales were also partly to blame for Jaguar Land Rover's recent job cuts, in which 4,500 jobs are being slashed as part of the company's $3.15 billion cost-cutting plan.
Sales of the XE sedan dropped by 21 percent in the first 11 months of last year with just 28,402 units sold, while its larger XF sibling sold just 29,563 units in the same period, representing a drop of 23 percent. Overall, sales, however, increased by nearly one percent thanks to the launch of the E-Pace compact SUV. "At the moment SUVs are in very high demand and their relative growth rates are strong, but we already see it leveling out," Jaguar Land Rover CEO Ralf Speth said in an interview with Automotive News.
The Jaguar XE competes against the likes of BMW 3 series, Mercedes C class and Audi A4, while the XF's sector is also significant.
"That means you have to be in these segments to be competitive and achieve the right volume to generate economies of scale," he said.
While demand for SUVs is showing no signs of slowing down, Speth believes that sedans could become popular again when stricter emissions regulations are introduced in Europe and China. "Whenever you think you go away from sedans, you have to consider new CO2 regulations," he said. "By 2030 and 2040 you are looking for reductions in the order of magnitude of 40 percent. That means from a pure physical point of view the concept of a sedan is far more favorable than SUV," he said, referring to the sedan's more aerodynamically-efficient shape compared to taller SUVs.
Jaguar will stick with sedans but might change the shape of the vehicles and increase the electrification for future models, but Speth didn't provide any further details. The next-generation XE and XF will be built in Jaguar Land Rover's new plant in Slovakia from 2023 and will form a key part of the automaker's electrification strategy, where every new model launched by the automaker after 2020 will be electrified.