After 17 years, Ford still hasn't fixed Jaguar. And with thumping losses and a hard-nosed troubleshooter taking a long hard look at the business, it might be time to sell the struggling brand. And there is no shortage of potential suitors, says Mark Bursa.

Seventeen years and more than US$5bn down the line, Ford still hasn't figured out what to do with Jaguar. And with the company plunging into deeper losses, the decision that has been considered unthinkable - selling the brand to a rival - looks increasingly on the cards.

There are suitors aplenty, if you believe the rumours flying round the business. We know Renault put in a bid last year - because they said so. But we also know Renault is really after Volvo, the car maker it tried to buy more than a decade ago, not Jaguar. And Ford doesn't want to sell Volvo.

PSA and Hyundai are both mentioned as potential buyers. Neither has a credible prestige brand, but would they want the hassle of sorting out Jaguar? It hardly fits with either company's strategy, though if the price were right (say, US$1?) they might take a punt.

A more likely outcome would be a sale to a smaller player rather than an established rival automaker. A cash-rich Russian Oligarch, for example, or a Chinese automaker. We've seen both of these dip their toes into the UK car industry: LDV and TVR are both owned by Russian billionaires, while what's left of Rover is tentatively being reassembled by Nanjing Automobile Corporation.

Of the two, the Russians seem to be making a better fist of it. LDV's new owners, GAZ Group, have moved swiftly and installed top-quality management in the form of Martin Leach and Steve Young. Young says he's still looking for a "donor company" to use as the basis for his revolutionary Indego concept - could Jaguar fit the bill?

Probably not, but both Leach and Young know Jaguar from their respective past careers at Ford of Europe and British Leyland. And in his brief tenure at Maserati, Leach has had his hands on a prestige brand. Jaguar might not become Indego, but it would be easy to manage alongside LDV from GAZ's UK office. And GAZ's Volga models are the dominant luxury cars in Russia - so there would be a ready-made distribution network in Russia for Jaguar. GAZ denies a deal is in the offing, but the company seems to be in pole position should Ford decide it's had enough of Jaguar.

How did Ford get into this position? The problem lies within Premier Auto Group (PAG), the division Ford established during one of its many 1990s restructures to manage the portfolio of luxury brands it had acquired.

After buying Jaguar, Ford added Aston Martin, Land-Rover and Volvo to PAG. Yet it has struggled to build a cohesive strategy that involves all four brands. And always, it seems, Jaguar is the odd man out.

Initially the plan was to turn Jaguar into a "British BMW". Key models in the BMW range would be replicated - 3-series, 5-series, 7-series, as well as new sports cars to capitalise on Jaguar's racing heritage. Ford was serious - so serious that it bought the Stewart Formula One team and rebranded it Jaguar, setting it up directly against the then-dominant BMW and Mercedes-backed teams.

Yet the speed of the new product introductions was glacial. The 1975-vintage XJS coupe wasn't replaced until 1996 - and even then the XK8 was little more than a rebodied version of its 21-year-old predecessor. A modern replacement didn't come until this year.

The XJ series, a car developed on a shoestring under Sir John Egan, before Ford took control, was reskinned and re-engined, but its replacement didn't appear until 2002. And Ford produced a car with a radical aluminium body - but with looks that made it scarcely distinguishable from the car it replaced. Radical engineering, conservative design - when arguably the exact opposite was what was needed.

The 5-series and 3-series rivals, S-Type and X-Type, carried the whiff of the parts bin. S-Type was based on the DEW98 platform, developed for Lincoln's LS model. Its overtly retro styling attempted to echo the 1960s Mk2, but its American origins gave it a woolly ride - hardly the way to match BMW's "ultimate driving machine". And quality issues plagued the model's launch.

X-Type fared even worse. Obviously a Mondeo under the skin, it had the same conservative styling as its bigger brothers. And crucial features like diesel engines and estate bodywork - vital for mainland European success - were missing from the launch line-up. X-Type sales have bombed, and it won't be replaced in 2008.

Meanwhile, BMW, Mercedes and Audi set about massive range expansions, adding SUVs, roadsters, coupes, people-movers, small cars and cabriolets. For all Ford's industrial might, it couldn't react. Jaguar couldn't have a 4x4 - because that would put it into direct competition with Land-Rover. Quick fixes - like R-D6, the handsome Jaguarised version of the Mazda RX-8 shown at the Paris Show in 2002, were rejected. There's a "crossover" SUV on the way - but not till 2008 at the earliest. Too little, too late.

Meanwhile Ford management had begun to realise that perhaps Jaguar wasn't the way to compete with the Germans. "British" luxury - all walnut and cream leather with British Racing Green piping - doesn't have the mass appeal of "German" luxury - black and charcoal, with hi-tech aluminium and carbon fibre detailing. Harris Tweed versus Hugo Boss.

So now the focus is on Volvo - "Swedish" luxury - light woods and modern design. Ford is doing for Volvo what it should have done for Jaguar. Rebuild the brand image without being in thrall to retro. Leverage its platforms and make a broad range of models. Volvo's XC-90 SUV has done well without damaging Land-Rover. The Focus platform has produced new S40, V50 and now C30 models.

The target is Audi - a sensible strategy to copy too - Audis are largely based on front-drive Volkswagen platforms, yet compete successfully against the rear-drive Mercs and Beemers that have no mass-market cousins.

So where does this leave Jag? The failure of X-Type has seen global volumes plunge to just 85,000 units last year - about one-tenth the size of BMW, and about the size of another German luxury car company - Porsche, Europe's most profitable auto maker. If Jaguar can't crack it as a volume brand, perhaps emulating Porsche is the way to go?

But again there's a problem within PAG. Aston Martin has very successfully moved in this direction. It has three models, and is about to add a fourth, the Rapide four-door coupe, which will compete head-on with Porsche's Panamera.

Is there a niche for Jaguar? British luxury brand? Racing history? Linked forever with Le Mans?  Volkswagen has very successfully built Bentley into a growing and profitable brand. But it'll sell about 7,500 cars this year - less than a tenth of Jaguar, and less than 1 percent of BMW's volumes.

The Jaguar brand is probably good enough - and Aston Martin's success shows that Ford is capable of making it work. But is there room for two low-volume luxury Brit brands within Ford's empire? And is there time to put such a plan together and execute it?

More importantly, is there the stomach to close Castle Bromwich and lay off most of the workforce at a time when the company has turned in a Q2 loss of more than US$500m?

Now may be the time to stop pouring good money after bad and recoup some of the US$5bn already blown on Jaguar. The thought is bound to have entered the mind of Kenneth Leet, the troubleshooter hired by Bill Ford to look over the business. The Jaguar brand is very recognisable and has some value - though whoever takes it on will have to bite the bullet and come up with a workable plan.

My guess is that would involve massive volume cuts; staff layoffs and plant closures; outsourced, rapid product development; modern styling that ditches the fusty, tweed-cap retro look; and flexible, low-volume production of cars with a much higher sticker price. And that might just work. Russian Billionaire Oligarchs, please form an orderly queue.

Mark Bursa

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