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Automaker in India doesn't want Jaguar
By Doron Levin Bloomberg News Service
Published on Tuesday, Sep 04, 2007
Good riddance to Jaguar and Land Rover.
Ford Motor Co. is auctioning the celebrated British brands to bidders that include private-equity firms and two Indian automakers. The goal is to raise cash, perhaps as much as $3 billion. A bigger goal should be removal of all distractions that might impede the rescue of Ford's floundering core automotive operations.
A dearth of fancy cars and trucks is one facet of Ford's troubles. Its own luxury brand, Lincoln, had been faltering for years. Instead of addressing it, Ford unwisely decided in the 1990s to spend billions of dollars buying European swanky car brands. Acquiring Jaguar, Land Rover, Volvo and Aston Martin since divested was analogous to an out-of-shape runner trying to regain championship form by buying expensive shoes.
Alan Mulally, the former Boeing Co. executive who took over as chief executive officer from Bill Ford Jr. a year ago, instantly recognized Ford as an automaker that had lost its way and stood on the brink of ruin. Mulally has openly blamed the lack of coordination among Ford's far-flung divisions and subsidiaries for the company's failure to pursue a common strategy.
Thus, Ford engineers in the
U.S., Asia and Europe, each operating in their own world, didn't design common vehicle platforms that could be sold in different markets at minimum cost, a routine practice at Honda Motor Co. and Toyota Motor Corp.
High neglect
Though Mulally hasn't been quoted as such, Ford's engineering and design output too often were second-rate, with no one assuming responsibility for improvement. That's why buying a prestigious luxury brand like Jaguar must have seemed like a godsend: the company could acquire what no one wanted to fix.
Ford then created Premier Automotive Group, yet one more costly bureaucracy for managing the prestige brands. A new group needs new headquarters, so Ford opened one in pricey Irvine, Calif., spending sums that probably will remain hush-hush for all time.
Toyota proved in the late 1980s that a carmaker doesn't have to buy a high-end brand or spend years to develop one. Toyota invented the name Lexus, which in a few years became synonymous with luxury in the U.S. because the vehicles' quality and the service from dealers were top-notch. Lexus since has turned into a worldwide upscale brand.
Customers realize that most Lexus models are just fancier Toyotas, selling at much higher prices. Even so, Lexus sells well and generates disproportionately large profits for the company.
Sprucing up?
Since Ford couldn't bring its own brands up to world standards, it's not surprising it couldn't do so at Jaguar. Chief among the troubles was the pedestrian X-Type sedan, meant to be a $30,000 entry-level Jag. It was an embarrassment since it barely looked or drove like a vehicle selling at a premium price.
Bayerische Motoren Werke AG might have been able to increase Jaguar and Land Rover's appeal by injecting its engineering and design prowess. But BMW's talents already may be stretched with two British car brands, Mini and Rolls-Royce, both of which have undergone revivals.
Mulally said the sale of Jaguar and Land Rover could happen by the end of 2007 or early 2008. TPG Capital, Cerberus Capital Management, Ripplewood Holdings, and One Equity are among the private-equity companies trying to grab Jaguar and Land Rover.
Asia rising
The most-intriguing interest comes from India, where two automakers, Tata Motors Ltd. and Mahindra & Mahindra Ltd., both based in Mumbai, may be preparing bids.
The Financial Times reported that Mahindra & Mahindra prefers to buy Land Rover only, even though Ford intends to sell both makes as a package. Ratan Tata, head of Tata Group conglomerate, said he is trying to extend the company's ''global reach.''
Without Jaguar and Land Rover, he can better concentrate on his most-important mission. If Ford's principal brand, the Blue Oval, doesn't regain its strength, it won't be long before a private-equity fund or Indian automaker again comes knocking. And next time they could be after the whole package.
Good riddance to Jaguar and Land Rover.
Get the full article here.
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