Jaguar goes for NPD investment with £5bn plan

A terrific example of investment in new product development in the news - which links into many other core business studies topics too.

This Reuters video showcases the new Jaguar car - the C-X75. Production capacity to make the C-X75 probably won’t be too much of a stretch. Jaguar are only intending to make 250 of the cars each year. However, the real value of the C-X75 is the further boost to Jaguar’s reputation for innovation in new product development. Several of the world’s luxury car producers are racing to design and launch electric supercars - Jaguar wants to get to market first and with the best care.

The C-X75 is a good example of a strategic alliance which brings together two firms with distinctive and complementary skills. Jaguar has the brand positioning, the manufacturing expertise and distribution clout. Its strategic partner is Formula 1 team Williams - which brings exceptional engineering expertise to the project. I suspect Jaguar won’t have to try too hard to find the first 250 customers (there are plenty of high net worth individuals for whom the C-X75 will be a perfect car to be seen using. Students might expect Jaguar to face excess demand rather than excess supply for this product, even with a proposed price tag of £700.000. A great example of premium pricing in action!

The alliance with Williams is just part of a bigger and broader investment in new product development by Jaguar. The FT reported in early May 2011 that Tata Motors Ltd, the parent company of Jaguar Land Rover, will spend 5 billion pounds ($8.2 billion) on product development and new equipment at Jaguar’s three U.K. plants over the next five years in a bid to improve quality levels to match its German competitors.

These key competitors are BMW, Mercedes-Benz and Audi – three German companies that have traditionally dominated the luxury end of the automotive business globally. Tata have explained that the investment will focus on developing new engine technology and advances in car body design to emphasise reductions in fuel use to fit in with legislation forcing carmakers to cut carbon dioxide emissions.