Ford Bets Billions on Jaguar

1592 Words Oct 10th, 2008 7 Pages
Introduction

In the late 1980s, Ford strategists took a good look at the booming luxury-car market and realized they needed a global luxury brand to rival BMW and Mercedes-Benz. They considered acquiring several luxury brands. First on the list was Alfa Romeo. But Ford lost Alfa Romeo when Fiat intervened, with a little help from the Italian government. Fiat did not want Alfa, but did not want Ford getting it either. Next came Saab and Jaguar. Ford was negotiating to buy both luxury-car companies at the same time. But Harold "Red" Poling, then Ford chairman decided Ford could not manage two acquisitions at once, so Ford backed out of the Saab talks. That left Ford to pay $2.5 billion for Jaguar, a legendary brand that had limped along
…show more content…
Sales in the United States fell to a 10-year low of 16 million units last year and are expected to sink further in 2008, while the German market skidded 9.2 percent to a 17-year low. At best, analysts say, overall demand in Japan, the United States and western European will stagnate (Krust 2008).

Ford Motor Co. CEO Bill Ford says that the automaker will fix Jaguar, but the brand will have lower volume than projected. Jaguar's products and brand value remain strong, Bill Ford said in an interview. But Ford tried to increase Jaguar's volume too fast, he said. Jaguar once targeted global volume of 200,000 units.

"In retrospect, it was just too big a stretch," Bill Ford said. "That end of the market doesn't lend itself to rapid expansion."
One of Jaguar's biggest stretches, critics charge, was introducing the X-type small sedan in 2001. It is based on the Ford Mondeo platform. Ford Motor hasn't decided whether to produce a second-generation X-type. In the X-type's defense, Bill Ford pointed out that the vehicle is the brand's highest-volume seller and attracts buyers who move up to other Jaguar models. The viability of a future X-type is one of several issues that Ford Motor is studying as it tries to turn around Jaguar. The automaker doesn't break out financial information for Jaguar or other Premier Automotive Group brands. But sources say Jaguar lost nearly $800 million

More about Ford Bets Billions on Jaguar