Cigar Aficionado

We have set sail for France, a priceless cargo in our hold. Twenty-seven rare, D-type racers heading for a reunion of sorts. As the ferry pulls into Calais, their engines cough, sputter, ignite with a roar that echoes through the cavernous ship. Out they spill, one by one, briefly onto the motorway, then off into the verdant French countryside towards Agincourt, tracing the path of the conquering King Henry V.

It is an appropriate route to follow, for when these road warriors made this trip the first time, 40 years ago, they were the scourge of France, bound for yet another victory at Le Mans. Jaguar'sD-types dominated European racing tracks through 1956, '57 and'58, and what made them all the more overwhelming was their grace and beauty. Part machine, part sculpture.

The convoy converges on the track, the gates open and the cars surge onto the tarmac. Past the pits and into the first curve, timidly at first, their owners nervous at the thought of wrecking these irreplaceable relics. But as they enter the Mulsanne Straight, racing's ultimate measurement of testosterone, the D-types take off as if cued from muscle memory. And the crowd is on its feet, a French salute to British racing green.

There's an old adage in the auto industry, "Win on Sunday, sell on Monday." Crudely American, but nonetheless apt as the British discovered. For the D-type proved to be more than just a sporting footnote. Its design was neatly transformed into one of the most beautiful production sports cars ever built, the legendary Jaguar XK-E. Today, the car still turns heads, and in good shape--sadly a condition all too rare--a used XK-E commands top dollar. It's no wonder that when you spend a little time with Jag enthusiasts, you're certain to hear the lament, "If only they built the XK-E again..."

Well, they have, and it's called the XK8.

"It's very easy to design a car that's a pastiche of cues, something that's trendy and hot," says Jaguar Cars Ltd.'s chief stylist, Geoff Lawson. "We worked very hard to avoid that temptation. Overall, we strove to bring obvious links with the past but without copying. The heritage of good design is like DNA: It must be traceable through history but not necessarily an exact duplicate." Not exact, but the influence is unmistakable, starting with the menacing, oval air scoop that was essentially lifted from the old XK-E. The windscreen is more steeply raked than the original, the tail tells the influence of aerodynamic tweaking in the wind tunnel. The XK8 is long, low and lean, a design all the more distinct in an era when so many onetime sports car fans are defecting to the fad of the '90s--the high-riding sport-utility vehicle. Thankfully, however, Jaguar designers were able to squeeze out an extra two inches of head-room, something that was always in short supply. The XK8 upholds another tradition, coming both in coupe and convertible. The motorized ragtop can be operated at speeds up to 10 mph, and can be opened or closed simply by turning and holding the key in the door for a few seconds. Although the convertible, at $69,900, costs $5,000 more than the coupe, Jaguar expects the ragtop to account for as much as 80 percent of its volume in the United States.

Like its predecessors, the XK8 is framed in burlwood panels and sumptuously padded in Connolly leather. Performance may be the underpinning of the Jaguar heritage, but luxury remains its trademark. The XK8 features such niceties as a CD changer, memory-controlled power seats and even a built-in remote for the garage door so you'll never lock yourself out.

While liberally mining the past, the company's designers avoided certain troublesome areas. Gone are the Lucas electrical components that earned the original XK-E a deserved reputation for unreliability. (Lucas was known to British car enthusiasts as the "Prince of Darkness.") This is a tender mercy, considering the extensive electrical underpinnings of the new car.

Also gone are the six- and 12-cylinder motors that were the hallmark of Jaguar cars for the past four decades. In their place is an all-new V-8, surprisingly the first in Jaguar's history. Dubbed the AJ-V8, the new engine is sophisticated, with 32 valves, four overhead cams, variable intake valves and a computer cable, rather than a mechanical linkage, connecting it to the driver's pedal. The power plant produces a gutsy 290 horsepower, yet its aluminum-block design is lighter than either of the engines it replaces. That translates into better performance and improved fuel economy. The electronically controlled, five-speed automatic transmission--another first for Jaguar--proves uncannily responsive and smooth, shifting almost imperceptibly with power still readily at hand. There's also a traction control system to improve the XK8's wet-weather grip, never a strong suit for Jaguar.

Sinewy is a word that might come to mind as you slip the XK8 into gear, though it could never be applied to the XJ-S, the sports coupe the XK8 replaces. The XJ-S was soft and sloppy, a British land yacht; the XK8's twin wishbone suspension is taut and responsive as we take to the back roads of North Yorkshire.

Call it a "spiritual Jaguar," for "heritage matters," suggests Michael Dale, a former race car driver and Royal Air Force fighter pilot who is now the president of Jaguar's North American sales subsidiary. He squeezes the throttle and the XK8's engine resonates with a guttural, almost primal growl, its wheels spinning upon ancient gravel. Little escaped Jaguar's attention to detail, even the sound of the engine. "We took audio recordings of all the exhaust systems we liked and chose between them," Dale explains. Engineers then tweaked and tuned until they came up with the right aural ambience.

But the local sheep couldn't care less. They are too busy tugging at the tufts of cropped, brown grass covering the Buckden moors like a patchwork quilt. A gentle mist spills across the rolling fields, chilling the bone and muting the earthen tones. We race along the narrow, twisting roads of an ancient route that is framed by ruined stone fences and hedges gone to bramble. Measure the XK8's performance with skid pad and radar gun, and the car lives up to its spiritual heritage, delivering the type of performance a D-type driver could only dream of. But will the new car match the success of the original? The question is more than academic, for not long ago Jaguar was sitting on the endangered species list, yet another British marque seemingly doomed to extinction.

The Jaguar of the early 1980s could have served as the poster child for what went wrong with the British auto industry. The company's technology was out of date. Its managers, designers and engineers couldn't come to grips with costs. Projects were running over budget and cars were desperately late to market. Union featherbedding filled the factory with redundant workers. These problems weren't unique to Jaguar--they had brought down many of Britain's other legendary marques, but it was clear that Jaguar had to change or it wouldn't survive.

How bad was it? The old joke was that anyone buying a Jaguar had to have a mechanic for a best friend. It wasn't all that far from the truth. By the end of the 1980s, top corporate executives at Jaguar were conceding that the aging XJ-S sports car was experiencing as many as 11 "problems" per car, a dozen times the defect rate of the new industry benchmark, the Lexus LS 400. "Those cars were an absolute disaster," Dale admits. And so, with the arrival of Lexus and other high-quality, low-cost (at the time) Japanese luxury cars, buyers deserted Jaguar in droves.

By 1988, Jaguar's long-term prospects looked shaky, and the worst part was that nobody seemed to care. Certainly not the British government, which held a sizable stake in the company. Under Margaret Thatcher, the Tories were intent on pulling out of the car-making business. But then, something amazing happened. Jaguar found itself the target of an unexpected bid-ding war that pitted General Motors Corp. against the Ford Motor Co. Ford put in the high bid, at $2.5 billion, but whether it was the winning one is a question that will long be debated.

There's an irony to the fact that Jaguar, a company so steeped in tradition, was being taken over by Ford. After all, it was Henry Ford who declared that "history is bunk." And indeed, in those first months, it seemed like Ford found little to cherish in Jaguar's heritage.

"We had no idea just how bad the situation was," recalls retired Ford vice chairman Allan Gilmour of the 1989 acquisition. Ford's bean counters were dispatched to Jaguar headquarters in Coventry. And what they saw sent them into a panic. The company Ford had bid on with such relish was a relic of a bygone era, a monument to British inefficiency and union payroll padding. The typical Lexus required fewer than 15 hours of direct labor to assemble. At Brown's Lane, Jaguar's main assembly plant, it took longer than that just to assemble the front suspension on the XJ-S. Total assembly time was nearly 130 hours. That difference alone cost several thousand dollars per car, unacceptable in the increasingly value-conscious 1990s.

Worse, Jaguar's design and engineering operations were so outmoded, the company simply couldn't come up with a competitive design to replace the aging XJ-S. "When Ford came in, we had a very tough time getting the program approved," notes Bob Dover, head of development on the XK8. In fact, Ford ordered Dover's team to tear up its original design and start over. But this time, he says, Jaguar had a parent with deep pockets to turn to for help.

Ford found itself in a quandary. The company had to do something to prop up its new subsidiary, but it also had pledged to maintain an arm's length relationship with Jaguar. "It would have been easy to take a Lincoln and put a Jaguar badge on it," says Jac Nasser, president of the Ford Automotive Group, "but that wouldn't have been a Jaguar." In other words, costs might have been cut, but few customers would have been fooled. And the odds are, Jaguar wouldn't have survived. So Ford agreed to pump in capital--$4.5 billion to date--and let Jaguar continue to do its own design and engineering work in Coventry. But most important, Ford set hard targets for cost, quality and deadlines--and made Jaguar live up to them. To facilitate these goals, Ford made available some of its technology and management know-how and transferred over several key executives, including Nick Scheele, Jaguar's new chairman, and Jim Padilla, an engineer with a reputation as something of a turnaround artist.

The changes sparked fear among the rank and file as employment was nearly halved; the entire Browns Lane assembly line was torn out and rebuilt. But the survivors knew there was no other option, and even the normally combative union seemed willing to work with the new owners.

In 1995, Ford and Jaguar had a chance to measure the payoff with the launch of the redesigned XJ sedan. "We took 40 percent of the body shop hours out of the car," exclaims Padilla. Though he has since returned to Ford headquarters in Dearborn, Michigan, Padilla continues to keep a watchful, wary eye on Jaguar's engineering and manufacturing operations. Jaguar also brought down costs by sharing parts with Ford. These are the hidden pieces that really don't matter to the consumer, Padilla pointedly adds, such as windshield wiper motors and the remote key fob for the XK8. Little parts, but big savings by leveraging Ford's economy of scale.

As important as it was to cut costs, there were other numbers everyone was watching. Many of the changes since 1989 have been aimed at controlling quality. For instance, of every 100 cars that roll down the assembly line, two to three are now checked down to the welds for potential problems. Workers have been empowered and encouraged to isolate and correct potential defects as soon as they develop on the line. "The whole object is to drive [defects] back to the point of origin in the plant, not to just take notes and file that in an office somewhere," Padilla says.

One should always be cautious about what one reads into early numbers, but if the latest internal audits are correct, Jaguar's defect count is down below one per car--0.9 to be exact. That's better than the industry average of 1.0--though not quite at the top of the world-class charts, because the best, such as Lexus, have made significant strides of their own.

"I've always contended Jaguar could sell as many cars as Mercedes and BMW--if they didn't have the quality problem," says analyst Chris Cedergren of Nextrend, an automotive consulting firm. Outselling the competition is not likely to happen--at least not in the near future. But with the introduction of the XK8, Jaguar sales have been posting triple-digit monthly gains, not just in the United States, but in such quality-sensitive markets as Japan. And Jaguar CEO Scheele believes the momentum will continue to build. "Our image lagged [behind] reality when quality was going down. Now it's going to lag reality as quality is going up."

Despite its strong start, the XK8 is still a niche product. It will take something more to transform Jaguar into a truly significant player in the global luxury car market. Expect to see more variations on existing models and more new products, Scheele hints. "We're looking to do something every two years. It's a huge change for Jaguar."

In about two years, Jaguar will take its biggest risk ever when it unveils its first entry-level luxury sedan, for the moment code-named X200. Again, in an effort to leverage its engineering budget, Jaguar is sharing the same platform as a new Lincoln small luxury car, known internally as DEW98. "We've never had the volumes to sustain a more affordable car," says Scheele. "Ford has given us that ability" by sharing development costs. The trick will be to maintain that ethereal "Jaguar-ness." For as Scheele puts it, "The car has to look like a Jaguar, feel like a Jaguar and smell like a Jaguar."

If the company's hopes are realized, Jaguar will sell at least 55,000 X200s annually after the car's scheduled introduction in 1999. That would increase the company's worldwide volume to near 100,000 a year. It's a tall order, analyst Cedergren cautions. "The customers Jaguar will try to win over with the X200 are already buying bulletproof Japanese luxury cars. That's why it's essential Jaguar rebuild its reputation for quality and reliability with the XK8 before the new car debuts."

Paul Eisenstein runs The Detroit Bureau, an independent automotive news service, and publishes The Car Connection, an Internet magazine (www.thecarconnection.com).