Blog: Ford comes clean
Dave Leggett | 12 June 2007
Confirmation that Ford is looking to offload Jaguar and Land Rover is in the news this morning following a briefing to MPs. A formal announcement is also expected. So, just how far down the track is Ford with the sale? Story I got yesterday was that you announce 'for sale' when you know you have at least one fish nibbling the hook. And it's most likely a private equity firm that has the resources (or a Middle East consortium maybe, as in the case of Aston Martin) to put in a US$3bn (say) bid alongside a business plan of some sort.
I don't want to sound a cynical note, but it's interesting to hear the talk in the US concerning Cerberus of private equity finding a 'new business model' to be in for the long haul with Chrysler. No more strip and flip.We'll see.
Would Jaguar-Land Rover be more an irresistible strip and flip proposition for a private equity firm? Take as much cost out as quickly as possible then sell on Land Rover and Jaguar separately? Land Rover has had much of its product renewed in recent years. The cupboard is full. And Jaguar might be ripe for passing on once the crucial XF model has been successfully launched; most of the product development spend has already happened, just the production engineering to round off before XF production starts later this year.
The private equity company would be mindful of the value of those two iconic brands. The problem is that Jaguar isn't profitable. But if cost can be brought down, selling them on separately might offer the best return. It might also mean unentangling some joint engineering and procurement activity though, but maybe there are creative financial possibilities there.
The writing was probably on the wall for Jaguar and Land Rover when Ford made that recent announcement that it was going back to a global platform strategy. But the signals at that time were not stron...
I'm starting to get a small idea of the scale of things here in China, but really, I'm only scratching the surface of this vast country....