Ford considers Jaguar sale with other brands

Ford Motor Co., which for months has insisted that Jaguar wasn't for sale, is shopping the brand along with Land Rover.

"We're assessing and investigating all our options as any responsible company would do, and we don't rule anything out," Ford spokesman Tom Hoyt said Tuesday.

Ford confirmed it has hired financial advisers to investigate a sale, but wouldn't say whether Morgan Stanley and Goldman Sachs are involved, as has been previously reported.

Hoyt dismissed reports that Volvo also is on the table. "There were rumors we were talking with BMW about Volvo, but we're in talks with no one about Volvo," he said.

With the No. 2 U.S. automaker posting a loss of $12.6 billion last year and its Premier Automotive Group—Aston Martin, Jaguar, Land Rover and Volvo—responsible for $2.32 billion of that, there's speculation that Ford is acting to shore up its finances. "I don't think they'd want to sell unless the future financial outlook and cash drain was looking worse than Ford thought," said Burnham Securities analyst Dave Healy. "PAG has become a drag on Ford, a distraction to management, and estimates floating around are that Jaguar loses $1 billion annually.

"A sale would be bullish if it takes losses off the balance sheet and brings in cash to pour into the restructuring program, but bearish if it's a realization the company is no longer certain about the financial projections that it had enough liquidity to make it through the recovery, and now they need more money."

Hoyt disputes that, saying Ford is in good financial shape after having secured $23 billion in loans. Still, Jaguar and Land Rover volume is small, and so both are expendable, said John Wolkonowicz, analyst with Global Insight.

"The priority has to be to fix North America and fix the Ford brand and not to fix Europe," he said. "If it comes down to selling Jaguar and Land Rover to do that, sometimes you have to take bitter medicine to get well."

Ford has taken a step in that direction by agreeing in March to sell Aston Martin to a group of investors led by British auto-racing champion David Richards for $848 million. Ford bought a controlling stake in Aston Martin in 1987 and the remainder of the luxury sports car-maker in 1994.

"You can save Lincoln, Mercury, Mazda or Jaguar, but not all of them," said Jim Hossack, vice president of AutoPacific. "You have to have priorities and take money from the sale to focus on getting North America under control."

Besides, he added, it could well be too late to resuscitate Jaguar, which Ford bought 18 years ago.



That raises the obvious question of who would want Jaguar and Land Rover. While Jaguar is a money pit, Land Rover has made a slight profit under Ford. But Ford might have to throw Land Rover in the deal to make Jaguar palatable, Wolkonowicz says.

Analysts suggest a variety of potential suitors, from Chinese to Asian companies without a luxury brand to Peugeot, Renault, Fiat and BMW in Europe, though based on shaky finances of its own, most rule out Fiat, and Carlos Ghosn, head of Renault, has dismissed interest in Jaguar.

"Anyone without a luxury marque might be interested," Healy said.

"Might" is the key word.

"Jaguar is a name with instant brand value, instant brand heritage, but instant problems because it carries so much baggage. How do you get Gen Y to buy one when they all drive BMWs?" said Wolkonowicz, who describes Jaguar as "a geezer brand that's not hip like it once was."

Ford bought Jaguar in 1989 for $2.5 billion. A decade later, under Chief Executive Jacques Nasser, it acquired Sweden's Volvo for $6.45 billion, and in 2000 it bought Land Rover for $2.73 billion from BMW.
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