Luxury cars making a comeback

The economic slowdown has opened a new segment in the high-end car market and luxury car manufacturers are pouncing at baby boomers and young professionals looking for their first premium car.

Jaguar Philippines Inc. said the emergence of this market segment has evolved into a global phenomenon and was particularly strong in Asia where luxury car models were finding new niches to boost flagging sales.

JPI chairman and president Wellington C. Soong told reporters yesterday that luxury cars were making a comeback with new models, targeting the younger market of 25 to 30 years old professionals.

In the Philippines, Soong said this segment was traditionally dominated by Audi, BMW and Mercedes Benz. Jaguar is a new entrant as it introduced its new X-Type SE 2.5 liter models, priced at P2.75 million per unit.

"This is Jaguar’s smallest model size in this range and so far, the response has been very strong," Soong said. "I am confident of capturing 30 percent of the market in this class because of the brand popularity, style and exclusivity."

The X-Type is Jaguar’s first compact sports sedan in 30 years and was expected to do even better than its S-Type predecessor which captured 87 percent of total sales in its market segment in 2000.

The new model was also the cheapest Jaguar model since the S-type was introduced in 1999. The S-type’s launch price, Soong said, was P3.85 million for the entry model. At present, the price was at P4.65 million.

According to Soong, Jaguar expected to sell between 100 and 150 units of the X-Type model for the whole of 2002, especially since the company was also offering a special financing plan that would lower the initial cash-out hurdle to P1.5 million.

"We believe that side by side with other models of the same price range, the Jaguar is an easy choice," Soong said. "Everyone wants to own a Jaguar. As the economy improves, soon, more people will."

According to Soong, the X-Type was being positioned as Jaguar’s flagship model in the Philippines that would account for 85 percent of its local sales. Considering the size and growth potential of the market, he said the whole Jaguar group was positioning the model as one of its bestsellers.

Soong said Jaguar was able to bring the price down for the X-Type model by using a smaller 2.5 liter engine which the company could import at 50-percent tariff. Everything else in the X-Type model, he said, was the same as the S-Type model.

"We can bring in 3 X-Type units but only if there is a specific order from a buyer," he said.

Luxury vehicles have been enjoying a significant comeback in recent years despite the economic downturns, enough to serve as a barometer used by economists to demonstrate the widening gap between low-income earners and high-income earners with huge disposable incomes.

In the US, luxury car sales soared 77 percent from 1996 to 2000, giving the automotive industry its only lift. As a result, some 54 model lines of luxury cars were slated for introduction in the US market alone this year.

The ever-expanding upper class and the slow emergence of an increasingly powerful middle class in Asia is expected to boost the sales of luxury cars even further in the coming years, regardless of the economic disruptions experience by the region.

According to Soong, the X-Type model was being strategically positioned in such markets as New Zealand, Australia, Indonesia, Thailand, Singapore, Hong Kong, Malaysia, Korea and even China.