Land Rover Sold, Moving Base to Irvine

By EDMUND SANDERS and MARJORIE MILLER

March 17, 2000 12 AM PT

TIMES STAFF WRITERS

Ford Motor Co. will announce today it has agreed to buy the prestigious Land Rover sport-utility unit from Germany’s BMW Group for $2.8 billion and plans to relocate the division’s North American headquarters to Irvine.

The deal is a further nod to Southern California’s fast-emerging reputation as a hub for luxury automobile makers and gives Ford another coveted nameplate to add to its portfolio of world-recognized luxury brands, consisting of Lincoln, Jaguar, Volvo and Aston Martin.

Ford officials said they plan to consolidate Land Rover with its other luxury lines in Irvine, where it moved its Lincoln-Mercury headquarters in 1998 to take advantage of California’s car culture and design expertise.

Land Rover would become the 18th auto or motorcycle company to base its North American headquarters in Southern California, which industry analysts have dubbed Motown West.

The company would not say now many jobs or what kind of jobs might move to Irvine after the sale closes. Land Rover’s current North American headquarters in Lanham, Md., employs about 60 and has relocated about 40 marketing, sales and administrative workers in the past year to BMW’s U.S. base in New Jersey.

“These are just the types of jobs we’re are looking for,” said Esmael Adibi, director of the Anderson Center for Economic Research at Chapman University in Orange. “They’re managerial jobs and typically they pay more.”

More importantly, Adibi said, the recent relocation of well-known companies to Orange County will help boost the region’s corporate image. “Orange County had been losing many headquarters,” he said. “The fact that major companies are moving here is a positive reflection.”

Local officials welcomed the news Thursday.

“Land Rover is obviously a quality operation and . . . definitely fits with our long-term strategy in attracting the best companies here to Irvine,” said Irvine Councilman Greg Smith.

Last month, Ford said it would move 225 jobs to Irvine as part of the relocation of its North American luxury lines, called the Premier Automotive Group, from New Jersey.

Ford, based in Dearborn, Mich., also plans to expand the product line of the Land Rover, which is known in the U.S. for its boxy, jeep-like Discovery and its pricey, amenity-filled Range Rover.

“It is our intention to leverage Land Rover to the fullest potential,” said Ford Chief Executive Jac Nasser.

Analysts said the Land Rover purchase will provide momentum to Ford’s recent push into sport utility vehicles and should broaden the company’s European presence.

“It’s a real coup for Ford,” said Jim Hossack of AutoPacific Inc., a Tustin consulting firm. “It will give them a muscle and cachet in the sport utility market that they might not otherwise have had.”

Land Rover sold 177,000 vehicles last year, including 30,000 in the U.S. The company employs 12,000 worldwide, primarily at its manufacturing plant in Solihull, England. Manufacturing will remain in England.

Ford expects to close the deal in the third quarter.

Troubled Group’s Crown Jewel

The decision by BMW to sell Land Rover, considered the crown jewel of the otherwise troubled Rover Group, reflects the German manufacturer’s desire to cut its losses after a disastrous 1994 purchase of the British car company.

Separately Thursday, BMW announced that it is selling the bulk of the Rover Group’s passenger car operations to the British venture capital firm Alchemy Partners.

Munich-based BMW said it will keep the new Mini, which is due to be launched at the end of the year, but is giving up on the rest of the car line after Rover lost more than $1.3 billion last year--26% more than in 1998.

“What this tells us is there has been a major rethink in strategy at BMW,” said John Lawson, an automotive analyst at Salomon Smith Barney. “The Rover brand, they discovered, really was a bankrupt brand, and they walked away from it.”

Rover has had three owners in the past 10 years. BMW bought it for $1.2 billion in 1994, mainly to gain access to Land Rover’s four-wheel-drive lines: Range Rover, Discovery, Defender and Freelander. The latter two are not sold in the United States.

The German firm subsequently spent as much as $5 billion more on the company while watching car sales drop annually, according to Willi Diez at the Institut fuer Automobilwirtschaft in Nuertingen, Germany.

The Rover car company was dubbed “the English Patient” as it continued to suck up investment and lose money. Rover sold 251,000 cars last year, including the Mini and Land Rover lines.

By contrast, the Land Rover operation has been profitable in recent years, analysts said. The unit reported nearly $1 billion in U.S. sales last year.

Alchemy Partners said its new business would be called the MG Car Co. and will produce the Rover 25, Rover 45 and the MGF sports car at the aging Longbridge plant in Birmingham. The facility employs about 9,000 people.

Industry analysts, noting a 20% overcapacity in European auto production, were skeptical that investors with no experience in the automobile industry could prevail where the experienced BMW had failed.

“Maybe they can run a smaller-scale operation more efficiently. I think it is going to be really tough for them,” said Gregory Melich, an analyst for Morgan Stanley Dean Witter investment bank. “The whole Rover experience has been bad for BMW. They’ve lost billions.”

Sanders reported from Orange County and Miller reported from London. Times staff writer Greg Hernandez in Orange County and Christian Retzlaff in The Times’ Berlin bureau contributed to this report.

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The Emerging Auto Hub

Land Rover is expected to become the 18th car/motorcycle maker to move its global or North American headquarters to Southern California:

1. American Honda Motor Co.

Opened: 1984

Employees: 1,800

2. Toyota Motor Sales USA

Opened: 1983

Employees: 3,004

3. Nissan North America Inc.

Opened: 1958

Employees: 1,054