Ford may sell Jaguar, with once-proﬁtable Land Rover as a sweetener, and retain minority shareholdings and technical links with both—if reports surrounding Kenneth Leet’s strategic recommendations are correct. And Ford will now have to consider if it is going to be in for the long term, or react as Wall Street is so prone to doing on a quarterly basis.
I advocate sticking it out, if I were on the Ford board. These brands are worth something to Ford, and allow it to have economies of scale across market sectors. But, as so often happens, American investment groups don’t seek the long term. Not after so many years of losses. I wouldn’t blame them so harshly this time.
The Observer’s report on Sunday made some sense when Julian Rendell wrote:
Despite its troubles, Jaguar still offers a huge amount to Ford. Alongside Bentley, Rolls-Royce, Aston Martin and Land-Rover, it is one of the few British car marques to retain global credibility. The brand still offers plenty of heritage to exploit; its designers and engineers know luxury saloons and sports cars inside out; its factories are relatively new; and there is a dramatic new sports saloon due to launch around 2008.
The question is whether Ford wants to be around to take advantage of all this, or whether it needs to sell up quickly to offset the worsening position in North America.
A well-placed industry expert in the UK is convinced a sale is planned. ‘I know they will sell it,’ he says. ‘It is quite logical. Jaguar has never made money and the prognosis doesn’t look good.’
It is true that in 17 years of Ford ownership, Jaguar has made money in only a handful of years. In that time it has absorbed around $5bn of investment—at least $1bn of that going into emergency recapitalisations.
But those ﬁgures don’t tell the whole story. It could be argued that Jaguar has been starved of investment. Over 17 years, an average of about £200m a year is not enough to keep pace with rivals such as Mercedes-Benz, BMW and Audi, whose model ranges now dwarf Jaguar’s. And, crucially, Jaguar’s German competitors have had diesel engines for years. Jaguar only got its ﬁrst diesel in 2003.
Someone will beneﬁt from all this. Renault was linked to Jaguar not long ago, and now Hyundai is. If the east is rising, then I would not be surprised, and the Korean company might more than readily use Jaguar’s and Land Rover’s technology in its more humble offerings. It might not even need deep pockets as so much of Jaguar’s future models are already sorted. The X-type’s R&D is advanced, and the S-type is nearly ready.
Hyundai emerged when a British Leyland boss went over there to help South Korea start on automobile manufacture. Nissan got its start with building Austins under licence. MG and Rover are in Red Chinese hands. The east may now beneﬁt not from technology, but from England’s great brands. It is almost the next logical ﬂow of assets as the region strengthens further and ﬁnds itself needing to compete more aggressively in ﬁrst-world economies.
Whether there is any strategic ﬁt remains open to question—and Hyundai itself has not shown itself to be that conscious of branding, in its 30-plus-year history. The cultural question may well be greater than that of capital.
The same issue might be plaguing Russian automaker GAZ right now, but it does have former Ford of Europe COO Martin Leach in its employ.
Del.icio.us tags: Jaguar Ford Land Rover transfer technology brands Hyundai branding luxury brands premium corporate culture capitalization investment Wall Street GAZ Posted by Jack Yan, 13:43
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