From the "That Was Yesterday" files: Jag, Land Rover, Volvo are on the block
In April, Mulally said Jaguar was part of the Way Forward plan and wasn't going to be sold, but needed to get its act together. News today, however, is that Ford has been trying to sell Jaguar and Land Rover to Fiat ever since February. Ford has also retained Goldman Sachs and Morgan Stanley to help it sell all of the PAG brands, including Volvo.
The talks with Fiat -- held between Ford of Europe head Lewis Booth and Fiat CEO Sergio Marchionne -- fell through last month. Fiat was interested in Land Rover because of the pace of SUV sales, and the fact that its "five brands are almost nonexistent in the growing global SUV market." Fiat was also interested in Land Rover's US dealership network, thinking Alfa might be able to pair up with them. Jaguar interested Fiat for its RWD platforms and V6 and V8 engines. But Marchionne ended the talks over fears its credit rating would be adversely affected by acquiring Jaguar and Land Rover.
PAG lost $327 million last year, but could be in the black this year, overall, having reported a $402 million pre-tax profit in the first quarter. Jaguar, however, has held things back: it has lost $500 million to $1 billion every year for the last six years, and Jag itself says it will be in the red this year and next. Neither Ford nor Fiat would admit to the talks, but Ford said it "is continuing to assess a number of strategic options for all of its operations. We're not specifying what they are and what we're evaluating."
Reader Comments (Page 1 of 1)
bmoredlj 1:11PM (6/11/2007)
There's virtually nothing Ford can do to make PAG MORE profitable - in the short-term - than just selling it. I have no doubt that Volvo, Land Rover, and Jag will do just fine if and when the Ford ties are severed, as they were with Aston Martin.
Ford wins because they could get cold-hard cash up front and dump companies that will probably never make big money for them - certainly not the way Porsches make money for Porsche.
The PAG companies win because their hoity-toity prestige will no longer be hurt by their affiliation with Ford.
Reply
British_Rover 2:33PM (6/11/2007)
I sell Land Rovers and the average person has no clue who owns Land Rover. Some people think BMW still owns them and some have no clue that BMW ever owned them. Land Rover being owned by Ford is not hurting land rover in anyway. Land Rover makes Ford money and until I see some more credible sources I won't believe any conjecture that Ford is planning to sell Land Rover. I don't see Ford selling Volvo either as Volvo is heavily integrated into Ford now.
Land Rover and Jaguar are heavily integrated as well so you can't sell Land Rover without selling Jag. No one wants Jag and Land Rover is profitable so why sell it?
3cubedminus3squared 1:12PM (6/11/2007)
I hope they don't sell Volvo.
They can sell Jaguar, which is probably holding Ford back from making Lincoln what it should be.
Reply
Solo Racer 1:25PM (6/11/2007)
I agree. Ford has benefited in many ways by owning Volvo and their stewardship, while maybe not perfect, is certainly better than what GM did to Saab.
Selling Jag and Land Rover makes sense. It's not that premium marques can't make money and be profitable, BMW does quite well, but they just don't seem to fit in with the huge organizations that Ford and GM are.
Jon 1:42PM (6/11/2007)
You are right, Jag is right where Lincoln needs to be. Also, Lincoln, specifically the MKZ, is where Mercury needs to be. Ford just has too many brands that should be in the same market. Jag needs to be sold and possibly Volvo as well, making room for Lincoln to move upmarket and Mercury to fill Lincoln's price range. (However, I would also like to know how Mercury would fare if it were as Dodge is to Chrysler: affordable sport-oriented cars. Mercury definately has potential in the Cougar nameplate. They could produce a muscle car with a V8 with displacement on demand and possibly a hybrid configuration, and offer it as a Flex-Fuel E85 or as a bio-diesel.
Igor Holas 1:15PM (6/11/2007)
THE NEW AUTONEWS ARTICLE IS NO LESS CONJECTURE THAN ANY ARTICLE BEFORE .... STILL DOES NOT HAVE CREDIBLE SOURCE ..
I am not saying PAG is not on the block - I just think that the speculative hype around Ford is getting out of hand, and a lot of the reports are getting increasing INCORRECT as they follow their own hunch in stead of any information Ford Provides.
Igor
Reply
H 1:23PM (6/11/2007)
I would like to buy a Alfa Brera from my local land rover dealer.
Reply
roadside observer 1:50PM (6/11/2007)
This article indicates that Volvo is NOT included in this proposal - that Ford is going to keep Volvo:
http://money.cnn.com/2007/06/11/news/companies/ford.reut/index.htm
Selling Volvo would be a big mistake IMO.
Reply
Nice 1:53PM (6/11/2007)
Neither Ford nor GM have no clue about making, marketing and selling premium cars.
Land Rover has suffered from high prices, bad quality, and poor city driving abilities for years.
Volvo is not much better. It is not a sporty brand, it is not a true luxury brand. It has image of safety (which is 20 years old and for a long time does not reflect reality), and nothing else to back up its premium price tag.
Jag has been making outdated vehicles for years and there is no change to it.
Sell them to someone who knows how to run premium brands.
Reply
Solo Racer 2:30PM (6/11/2007)
Volvo's reputation for safety and reliability goes back more like 40 years.
As for Jag, what are you talking about? The low-end model shares the same platform as several other Ford vehicles. The Jags designed and built under Ford's ownership bear little resemblance under the sheet metal to what came before.
Still, Jaguar and Land Rover are crowding out Lincoln/Mercury. The irony is that the luxury brands showed improved financial performance for the 1st quarter of the year. Unfortunately, Ford's overall market share declined sharply. That's why a sale of the foreign PAG brands, even Volvo is probable. For now it appears only Jag and LR, but Mulally says Ford is "accessing all possibilities."
I think keeping Volvo and the stake in Mazda makes sense, along with doing more to distinguish Lincoln from Mercury, as Jon posted above.
Nice 2:58PM (6/11/2007)
Except for the last 15 years Volvo wasn't the safest car, bypassed by Saab, Mercedes and BMW.
Jag is way behind with its X, S and XJ models. And the fact that Ford re-uses Jags platform isn't really a compliment.
No one really cares for Lincoln (not counting few people over 80 and rappers), and I highly doubt anyone needs it.
So let Ford transfer ownership into someone's capable hands, potentially saving those brands from sinking with Ford.
Paul 3:06PM (6/11/2007)
Does not refelct reality? Surpassed by Mercedes, BMW, and Saab?
HA!
Saab is keeping up, VERY closely to Volvo's safety, and beating it in some aspects. However the majority of Volvo's safety features cannot be measured in government tests. Frankly, based on the government tests, all entry level and up luxury brands are pretty much the same - but Volvo is constantly introducing systems that no one else has even thought of yet - they were the first with WHIPS and BLIS - Saab is close in the government catagory but not as close in innovation. BMW is in a whole different league... and not in a good way.
Tool 1:55PM (6/11/2007)
Wow. Ford continues to bleed.
Ford Motor Company has lost 8 pts of market share over the past decade and if/when they throw PAG out, that will be another point of share.
It's sad that Ford can't seem to be able to manage ANYTHING lately. Especially when it seemingly has the right brands to be able to hit every market niche.
When does this hemorrhaging ever end? Ow will it?
Reply
Hamud 2:01PM (6/11/2007)
They just can't sell Volvo, would be the dumbest thing they could ever do.
Reply
Lee 2:11PM (6/11/2007)
I think Ford Motor Company needs to sale everything they own except Ford, and Lincoln-Mercury and get it back to they way it used to be. Have all of these company is nonsence all it does is waste money. In my opinion any automaker that sales just over 20,000 cars a year (JAGUAR) needs to be put out of its misery or sold to a Company who can actually do something with it. Something with Land Rover is sales to bad for Ford to keep it running good its just loseing money. The only one that Ford could probably keep and make money on would be Volvo because they sale an average of 120,000-140,000 a year. Plus I personally would hate to see Ford sale Volvo.
Reply
Kyle 2:26PM (6/11/2007)
Ford Motor Company should sale Jaguar and Land Rover because they are just loseing money and are hurting the Company.
And in my way of thinking Ford should sale Jaguar and take Lincoln and make put it in the market Jaguar is in And Ford should take Mercury and move them into the spot Lincoln currently fills and make Mercury compete with Acura and Audi and I think that would work as long as Ford did not over price Mercury. But the only problem with doing that with Mercury is it kinda puts Mercury in the same spot Volvo currently fills. So I think it maybe in Fords best intrest to sell Jaguar Volvo and Land Rover.
Keep Ford Mainstrem
Make Mercury Really Upscale To Compete Against Acura and Audi.
Make Lincoln High End Luxury To Compete Against Lexus and Mercedes-Benz.
That could work as long as Ford priced the vehicles right and made them with the Quality to really compete.
Reply
Tim 2:43PM (6/11/2007)
I think that would work to.
And I love the idea about Lincoln and Mercury.
hosss 3:04PM (6/11/2007)
The reason for the loss-making at Jaguar is the pitiful state of the US dollar. Jaguar has an over reliance on the American market but exchange rates mean that cars priced to sell cannot make money. Ford can either move production to the US (brand suicide) or wait until the exchange rate improves......bound to happen eventually? Seems that Ford wants to sell at the bottom of the market and let someone else reap the profits when the situation improves.
Reply
Robert 4:14PM (6/11/2007)
So, conjecture and speculation aside, Ford has two things to look at. First, its current financial situation versus the load the Jaguar and LR put on it and then second, it's brand strategy longer term.
From a financial perspective, selling Jag and LR could go either way. If Ford has just again dumped billions into Jag to get the XF out in 2008 and the new XJ in 2009-2010 along with potentially an XK and an X refresh by 2011-2012, then does it make sense to sell right now? Maybe, if Jag is worth more than the investment they just sunk along with expected future losses. LR is a little harder because Ford actually makes money on them.
For long-term branding, we have to look at Mercury vs. Volvo. If Ford did not own Volvo, Mercury would probably be in that slot - upscale from Ford with subtle, luxurious design touches. Selling the Milan as a restyled Fusion works to some extent, but ultimately Mercury needs to differentiate to survive. Then, you use the financial calculation of how much it would take to turn Mercury into a brand with that perception, how much profit from Volvo would disappear and then how much less you'd have to invest in it long-term.
Fortunately, despite what the doomsayers claim, this is not a sign of Ford falling apart. I think this is a good sign that they are actually considering how to balance product dev needs, long-term financial stability, branding and corporate structure - all things that I think Ford has failed miserably on in the last 10 years.
I personally think that Ford should either drop Mercury or sell Volvo. Jag and LR should be bundled even more tightly in dev and engineering costs and kept internally unless someone offers some really good money for both brands.
I also think an interesting strategy could be to sell off all PAG and buy the remainder of Mazda (maybe $6 billion - probably close to an even trade), reposition Mercury into Volvo territory (maybe through Euro imports) and then beef up Lincoln into a direct Lexus and Caddy competitor.
Reply
Seamus 9:52AM (6/12/2007)
Jaguar and Landrover are for sale. Its all over the Press today. Just heard on BBC Radio 1. There was no mention of Volvo though. Looks like Volvo is there to stay for a while anyway.
http://news.bbc.co.uk/1/hi/business/6743669.stm
Reply