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Monday, March 28, 2005

Mum and Dad, Send Quid Quick!

More bad financial news for Ford. Jaguar needs a cash infusion, to the tune of a billion dollars. From CBS Marketwatch:
SAN FRANCISCO (MarketWatch) -- Ford Motor Co. is preparing to inject 500 million pounds ($935 million) into Jaguar, the loss-making luxury car maker it acquired in 1989, the Sunday Times of London reported.

Jaguar, maker of the XK, XJ, S-Type and X-Type, lost 601 million pounds ($1.1 billion) in 2003 amid spending on product development, worse-than-expected sales and a plunge in the U.S. dollar versus the British pound. That loss included a 533 million pound write-down in the value of its assets, the newspaper reported.
Ford needs to have Jaguar self-sufficient, or make radical changes. If people don't want to buy Jags, but would rather buy BMWs, Mercedes, and Lexus, maybe a re-evaluation of Jaguar is necessary. Maybe Jaguar needs to be platform engineered with Ford of Europe's vehicles, like a European Lincoln? Or maybe Aston Martin, Land Rover and Jaguar should be spun off as an independent company, to pursue their British-ness.

It could be called British Motor Works, or BMW for short.

Market analysts have been saying for some time that the luxury market will grow faster than the bottom end, so Ford definitely needs a player at the table. Maybe it isn't with Jaguar, maybe it will have to be Volvo.


December CYTD %
2004 2003 Change
Sales By Brand
Ford ... 2,778,678 2,894,347 -4.0
Mercury ... 193,534 202,257 -4.3
Lincoln ... 139,016 158,839 -12.5
Jaguar ... 45,875 54,655 -16.1
Volvo ... 139,067 134,586 3.3
Land Rover ... 35,506 39,035 -9.0

Total Ford
Motor Company 3,331,676 3,483,719 -4.4


Anonymous said...

How would you suggest that those companies that get spun off into a single company retain their unique brand qualities? As a Land Rover employee I think that the luxury SUV market will only continue to grow, I also think that Ford see's this, demonstrated by their influx of millions of dollars into the Land Rover name

Unknown said...

Mr. Anonymous,

Let me begin by saying that I have nothing against my British cousins in the industry, and I have no wish for any of you folks to lose your jobs.

Ford has already been moving towards parts sharing between Jaguar, Land Rover, and Aston, to some extent. Land Rover's new engines are modified Jaguar pieces.

The problem I have with Land Rover is that I suspect it cannibalizes sales from Lincoln (and now Volvo) who are also in the luxury SUV business. Granted, they don't make anything like the Range Rover, but the LR3 and Discovery compete with the Navigator, Aviator, and XC90, at least in price.

Unique brand qualities are mostly found in styling, and tuning. Those can always be kept separate.

Anonymous said...

I see your point about stealing sales from Lincoln and Mercury and Volvo, but doesn't the money end up at the same place? Do you think Ford cares if they get 50K for a LR3 rather than a Volvo?

Unknown said...

The profit does wind up in the same place. However, Ford is thought of as an American auto company (that is the core business), and it should be careful about protecting the home plants.

Ford has UAW obligations in the US, so cutting production here may be more financially destructive than cutting production in the UK.