Ford to flog Jaguar and Land Rover
Newswheel staff :: 13 June 2007 :: Filed under Ford, Jaguar, Land Rover
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The Blue oval tires of semantic gymnastics
“Jaguar is not for sale at this time.” So said Ford’s head honcho Alan Mulally in January. Jaguar and Land Rover are “not for sale” quothe Lewis Booth, head of Ford’s Premier Automotive Group (PAG) in March. Well, either those chaps were indulging in Clintonesque semantic pedantry or there’s been a rapid change of heart at FoMoCo. Following reports this week that British politicians had been advised of plans to flog both Jaguar and Land Rover Ford, has confirmed that it is “actively investigating its options” with the two brands…
According to the FT newspaper, Ford has given financiers at Goldman Sachs, Morgan Stanley and HSBC the green light to begin tidying up the paper work and sniffing around for potential buyers.
But who exactly might that be? None of the major car firms look like terribly plausible candidates. The big Germans brands are almost definitely out – all of them have their own premium car brands and luxury off roaders. Fiat is busy enough with its own recovery and frankly Toyota and Honda have better things to do than dabble with a pair of tarnished British niche motor manufacturers. And the less said about destitute GM the better.
Ah, but what about the Chinese?
As for the Chinese, they’re probably not quite ready to manage premium Euro brands. All of which makes PSA Peugeot Citroen and Renault-Nissan probably the only major players who could possibly step in.
However, former Ford of Europe boss Martin Leach rocked up on the BBC’s Today show and suggested a private equity deal was the most likely result. “The two businesses have not been profitable for some time; the deal will most likely include some downsizing,” Leach said, rather ominously.
The next question is whether both brands will be sold as combined package. The two companies share a range of back office functions as well as actual technologies and manufacturing facilities, so it looks like a logical move. However, a deep throat source close to the deal allegedly told the FT that all options are on the table. The implications are pretty obvious. Ford just wants to get rid.
Which leaves us to consider the sordid matter of money. How much are the two brands worth? Let’s leave the fine details to the money men and agree that it won’t be much. One estimate from automotive strategy firm Lansdowne Consulting puts the combined total at well under a billion pounds and perhaps as little as £500 million.
Rapid recovery?
Hence, the sale of Jag and Land Rover is just a small part of the recovery plan which sees Ford back in profit in 2009. The company reportedly lost $12.7 billion last year and wants to get back to basics as a mass market manufacturer. The piddling 250,000 – 300,000 units cranked out by Jaguar and Land Rover combined is a distraction the company frankly can’t be bothered with anymore.
Incidentally, there’s no news of an impending sale of the Volvo, the Jewel in the PAG crown and the only profitable part thereof.
Inevitable as the news is, it’s still a sad turnout for both brands. Land Rover has produced some pretty nice product of late, even if the Discovery III and Rangie Sport are a bit too plump. Likewise it must be said quality at Jaguar is also much improved.
Uncertainty over the future ownership of both marques won’t exactly set residual values of existing Jags and Landies on fire, either.
Linkage:
FT.com
