Ford may shed luxe brands, refocus
Ford Motor Co. may be ready to end its long-running European tour.
The automaker reportedly is actively shopping its premium Volvo, Jaguar and Land Rover brands, news that comes just months after unloading the prestigious Aston Martin nameplate.
Selling the remaining members of its Premier Automotive Group, which has its North American headquarters in Irvine, would end Ford’s 20-year effort to expand its sales of luxury cars by buying European automakers.
A handover likely won’t register with many American motorists, given Ford’s arm’s-length relationship with its foreign brands.
“Very few people actually knew that Ford owned Jaguar or Land Rover or even Volvo,” said Dick Messer, director of the Petersen Automotive Museum.
A sale would allow Ford, which lost $12.75 billion last year, to focus on getting its core North American business in order, analysts said.
In terms of generating cash, “a sale isn’t going to make or break Ford,” said automotive analyst John Novak of Morningstar Inc. “But it would simplify the company’s structure and allow management to focus on the problems that ultimately will make or break the company.”
Ford hired two investment banks to handle the possible sale after holding unsuccessful talks with Italian automaker Fiat earlier this year about a possible sale of Jaguar and Land Rover, trade publication Automotive News reported.
A spokesman at Dearborn, Mich.-based Ford said the company wouldn’t comment on speculation regarding a possible sale.
Whether a sale would be good for the three brands depends on who buys them, said Tom duPont, publisher of the duPont Registry, a luxury lifestyle chronicle.
He doesn’t see Toyota Motor Corp., General Motors Corp. or another mass market car maker as a good fit.
“It’s a little bit like trying to sell Godiva Chocolate to Hershey,” duPont said. “They’re both candy, but they speak to an entirely different audience.”
Ford sold most of its stake in Aston Martin, a British company known for making small batches of very expensive high-performance cars, to a consortium of investors that included a noted British racing mogul and a well-known car collector. The match bodes well for the future of Aston Martin, duPont said.
The ranks of potential buyers for Volvo, Jaguar and Land Rover include Chinese or South Korean automakers looking to upgrade their image, analysts said, or possibly a private equity buyer with an itch to manage a prestige auto brand.
The agreement last month by private equity firm Cerberus Capital Management to buy Chrysler from DaimlerBenz for $7.4 billion indicates that investment companies are interested in the auto sector, said analyst Shelly Lombard of research firm Gimme Credit, and could spark interest in the Premier Automotive brands.
“If ever there was a time to off load these things, this is it,” she said.
Ford bought a controlling stake in Aston Martin in 1987 as it moved to expand its luxury car offerings beyond its own Lincoln brand. It acquired Jaguar in 1989 and Swedish automaker Volvo was added to the stable a decade later. Ford bought Land Rover, a British company known for its big SUVs, from BMW in 2000.
The Premier Automotive Group lost $2.32 billion last year. Ford doesn’t break out profit results for the individual brands, but Jaguar, which has seen its U.S. sales fall 25% so far this year, is generally thought to be struggling the most. Also, Volvo is in a two-year sales slump but is profitable.
Lincoln, meanwhile, has lost much of its standing as a leading luxury brand.
Publicly, Ford executives, including Chief Executive Alan Mulally, have said over the last several months that there are no plans to sell the three remaining European brands, although they haven’t ruled it out.
The Premier Automotive Group employs fewer than 300 people at its Irvine operation, most of them engaged in marketing and finance. The group’s global headquarters are in London.
