Ford Motor Co on Wednesday publicly announced the long-awaited sale of its European luxury brands – Jaguar and Land Rover — to Indian automaker Tata Motors Ltd in a $2.3 billion deal that several analysts have applauded and some have questioned.
While the jury is still out on whether this was a good decision for Tata, it begs the question for Ford: Why is Ford selling non-U.S. brands at a time when its rivals are focusing on overseas growth?
Sure, Ford has lost more than $15 billion in the past two years, and it needs cash. But after selling its famed Aston Martin brand last year and now shedding these two British nameplates, Ford is left with just one non-U.S. brand — the Swedish unit Volvo. No certainty on how long Volvo will be a part of the Ford family but it’s staying put for now.
General Motors Corp, which saw 59 percent of its global sales occur outside the United States in 2007, has said it expects overseas sales to surpass domestic sales continually for the next few years.
Chrysler, which was split off from German automaker Daimler in 2007, is also eyeing international growth as it takes several steps to increase its presence overseas.
While U.S. auto sales fell to their lowest level in a decade last year and are expected to fall further this year, countries like India, China, Russia and parts of Europe and South America are proving to be markets of rapid growth with a healthy appetite for foreign brands.
Perhaps Ford’s sale at a time like this underscores the gravity of its situation in North America. The automaker has said it needs to focus on restructuring its U.S. operations and bringing them back to profitability. The company’s North American unit alone lost $6 billion in 2006 and $3.5 billion in 2007.
If U.S. auto sales slip below 15 million units this year, as the most pessimistic forecasters suggest is possible in a recession, pressure on Ford and its U.S. rivals to cut costs and protect cash will only grow.
That will put the spotlight back on Ford Chief Executive Alan Mulally who will have to show that the company’s focus on turning around its largest market really was “a better idea.” (The three words that made Ford’s ad slogan famous in the 1960s and 70s — when the U.S. market was flourishing and Ford did, indeed, have several better ideas.)
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5 comments so far
Integrating Taurus brakes on the XJ platform and creating the X Type… simply means that Ford did not respect Jaguar’s heritage in any way. Lets hope Tata is successful in returning the company to its previous glory… of building beautiful automobiles.
- Posted by William TarverJaguar is suffering from no profit i.e. it makes a loss; Land Rover although makes profit has become increasingly tied to Jaguar; noting that without Land Rover, Jaguar woudl be worthless.
Ford had a lot of restructuring to complete at Jaguar and did have resistance; Jaguar even back in early 90’s in some quarters [not all but some] believed that it was simply good enough to be Jaguar [it is not, it needs good cars also]; Jaguar did not help itself, look at Land Rover, it did and the results show.
Ford did the right thing, they are expanding in India, they are expanding in Europe [where they are going from strength to strength] and for me they are getting the “world cars” script togehter [like the new Fiesta etc]; they are doing great things all over the world and for me Austin Martin was unfortunate, Jaguar was necessary and with an expanding line up Land Rover for me did not fit; Ford shoudl bring Lincoln over into the EU from the USA and introduce the new exciting products from that range as top end models; Volvo for me needs to continue to grow and develop and develop.
Facts are Jaguar was not any good when Ford got it, without Ford Jaguar woudl have been bankrupt years ago; Jaguar really did not help themselves ten years before Ford and did not help themselves whilst under its ownership; we owe Ford a big thank you for keeping Jaguar alive; and Ford did the right thing, its a clean sweep for Ford, it can concentrate on its own brand with the fantastic cars it has; I am EU based and its cars are class leading and setting the class benchmarks; it was the right decision and can Ford please bring Lincoln to the EU.
- Posted by SteveAs part of its restructuring effort in order to return the company to profitability, the Ford Motor Co announced on Wednesday that it will sell its Jaguar Land Rover operations to Tata Motors Ltd, a family-controlled auto company based in India. The total amount to be paid in cash by Tata Motors for Jaguar Land Rover upon closing will be approximately US $2.3 billion, Ford said in its statement. “Jaguar and Land Rover are terrific brands,” said Ford CEO/President Alan Mulally. “We are confident that they are leaving our fold with the products, plan and team to continue to thrive under Tata’s stewardship.” Mr Mulally then sought to inform investors that the company has a strategic plan in place to ensure its future profits: “Now, it is time for Ford to concentrate on integrating the Ford brand globally, as we implement our plan to create a strong Ford Motor Company that delivers profitable growth for all.” Whatever Ford’s future turns out to be, it’s clear that this was a crucial deal for the company, and the personal connections between the two companies could have been a critical component in facilitating its completion.
- Posted by NewsVisualThe sale of Aston Martin last year and the recent sale of Land Rover/ Jaguar does not mean Ford is not seeking to expand further globally. Yes, Chrysler is making more efforts to strengthen its global presence, which is currently very weak. Ford Motor Co. has a much stronger presence in international markets than Chrysler. In addition, it’s making the Ford brand itself more global. Good part of Land Rover/ Jaguar’s sales came from the US-market anyway. Keeping the money-losing brands weakens Ford’s portfolio and requires the R&D resources that could be used toward the development of more profitable products bearing the Ford and Lincoln names.
- Posted by J.B. ArrudaJust a note: Volvo is not the only non-U.S. brand the company has remaining. Ford also has Mazda.
- Posted by Marc