by Andrew Tangel/For The Star-Ledger
Friday August 28, 2009, 5:41 PM
Next year, a sleek new Jaguar, starting at $72,500, is set to roll out into showrooms on the heels of one of the worst economic downturns since the Great Depression.
Even though the economy has shed millions of jobs and financial markets have lost much of their value, Mahwah-based Jaguar Land Rover North America is betting well-heeled car buyers will embrace the 2010 Jaguar XJ.
Luxury car sales have slumped in recent months. Jaguar, for example, sold 1,394 cars in July 2008, but only 783 cars were sold last month (although the company attributes the decline in part to strategy).
“Even the best, the most luxurious brands have been hit hard,” said James Hutton, a professor of marketing and communications at Fairleigh Dickinson University in Teaneck and Madison.
Consumers have been spending considerably less on luxury items overall this year, according to a report by the New York consulting firm Bain & Co., which has predicted luxury goods sales would fall by 10 percent. Among luxury items, Bain has forecast apparel would slide the most, followed by jewelry, watches, leather goods, shoes and accessories.
Still, there is hope for a rebound. Bain also predicts the market for luxury goods will again reach 2007 levels by 2012.
After sales of BMWs fell 28 percent in May from a year earlier, the pace of the decline slowed the next month, with a 20 percent drop in June, compared with the same month the previous year.
Luxury automobile sellers “are seeing a bottom. They think the worst has past,” said Milton Pedraza, chief executive of the Luxury Institute, a New York-based consumer-research firm.
Marketing luxury cars successfully in an economic downturn is possible with the right pitch to the right people, Hutton said.
“Success breeds success,” he said. “Right now, especially, people want to know that this person is still successful, still stable through a down economic period. The (companies) that seem to be succeeding are the ones that are very creative about not destroying the brand but still offering better value in a recession.”
Jaguar attributes its sales decline to the nationwide drop-off in consumer spending, but also to a strategic shift toward reducing sales volume and increasing profits from more “exclusive” inventory aimed at high net-worth buyers looking for more value in luxury items.
“We have exclusive volume, at the end of the day. We don’t have thousands of cars sitting out in a port somewhere,” said Paul Faletti, vice president of marketing for Jaguar North America.
The company predicts the new XJ’s features — such as a nearly all-glass roof, high-definition touchscreen display and a lighter body of recycled aluminum — will add value in the eyes of customers, even while the 2010 XJ’s starting MSRP is about $5,000 higher than the basic 2009 XJ’s price tag.
“They’re not going to give up luxury in most cases,” Faletti said.
Jaguar, owned by the India-based conglomerate Tata Motors, has been altering its cars’ designs, and has reportedly been attracting a younger demographic. For at least one model, the average new Jaguar buyer is 50 years old, whereas the average Jaguar owner is 60, Faletti said.
Dennis Squitieri, managing director of the Bergen Jaguar in Paramus, said his dealership on Route 17 has seen a noticeable increase in interest and sales in recent months, especially compared with late 2008.
Last September, after the financial and labor markets tumbled into a tailspin following the collapse of the investment bank Lehman Brothers Holdings, Jaguar sales dropped, Squitieri said.
“In September, they probably wouldn’t have wanted to flaunt” high net worth with a luxury-car purchase, Squitieri said.
Recently, however, Squitieri senses different sentiment from prospective car buyers.
“The economy is going to get better,” he said. “People are going to feel like they have permission to go ahead and buy luxury items.”
Andrew Tangel is a reporter for The Record. Bloomberg News contributed to this report.