Ford Death Watch 24: Jaguar: Momento Mori
Once upon a time, a dapper German auto exec named Wolfgang Rietzle dreamed of running BMW. When the Bavarians gave Wolfie the cold shoulder (twice), he left their employ to build his own, even larger fiefdom: the Premier Automotive Group (PAG). Technically, Ford owned Wolfie’s farrago of upmarket car brands. But as far as Wolfie was concerned, “his” five luxury marques vould vun day rule ze vorld! Three years later, Bill Ford tried to fail Wolfie upwards. The mad professor banked his bucks and blew town, leaving a Frankensteinian monster for Ford to fix. Yesterday, Ford said it lives! I say, grab your pitchforks!
According to Ford’s Chief Financial Officer Don Leclair, the Premier Automotive Group will make a profit in ’07. Although the Jaguar brand is drowning in a sea of red ink and Land Rover is treading water, Leclair sees Volvo’s bank balance as a rising tide, lifting PAG's financial results. He predicts Volvo’s gains will cancel out Jaguar’s epic losses, and them some.
At the same time, Aston’s upcoming sale will generate $1b or so, making the whole PAG bottom line thing look mmmmighty fine. For a company that’s seen its U.S. market share melt like a popsicle in a sauna, a carmaker that’s hocked everything up to and including its own logo, a multinational enterprise that dropped $27b last year, this is extremely welcome news. OK, “informed speculation.”
If Ford gets Jaguar back on track and into the black, the automaker can serve some major humble pie to all those analysts who told them to deep six Jag (and Aston, Land Rover, Mazda and Mercury) and build a few nice Fords, for Christ’s sake. There’s only one problem: it ain’t gonna happen.
Automotive News reports that Volvo has generated about $1b a year since Ford created PAG back at the turn of the century. Unfortunately, the winning streak ended last year, in the second and third financial quarters. Automotive News attributes Volvo’s declining sales to its “aging product line;” which is only kinda true.
Yes, the S60’s ’01 roots are showing. But the XC90 was da bomb back in ’03, the S40 and S50 are box fresh (’05), and the C70 refresh is in da house. Looking ahead, the S80 and XC70 are scheduled for an ’08 update. Volvo’s stalwart V70 is up for renewal early next year. Whatever bounce Volvo gains from these models may restore their bank balance, but it won’t send it into the stratosphere.
To really stoke-up the financial furnace, Volvo’s called brand extenders (we ain’t afraid of no ghost). In the late summer, the funky chunky C30 hatchback appears. Next year, the XC90’s mini-me, the XC60, checks in. Yes, but– to iron out all the bugs, Volvo will be “soft launching” these models in Europe. In other words, even if they’re a hit, it’ll be a couple of years before they’ll make any significant contribution to Volvo’s bottom line.
Meanwhile, Jaguar is busy dying. TTAC has obtained Jag’s final worldwide numbers for ’06 (ironically enough, the American department responsible for collating the data was recently cut back). Last year, Jaguar sold 75,013 vehicles, down from the previous year’s total of 89,802.
In many ways, Jag’s ‘06 sales mix is even more depressing. In the American market, Jag dealers sold roughly five thousand examples of each of its four models. Abroad, Jag sales tilted heavily towards the British marque’s entry level whips. The X-Type generated 27,305 sales, while the S-Type clocked-up 13,222 (as compared to 7250 XJ’s and 6540 XK’s).
On one hand, the relatively strong sales of Jag’s cheaper models may indicate that the brand’s finally gaining traction amongst younger buyers– at least overseas. On the other hand, it may not. Anyway, last year, Jag lost $750m– just over $10k per car.
Ford claims Jag’s losses will fall to $500m this year, $300m next. How? Either the company is about to cut production big style or… what? The new fish-faced XK is pretty much dead in the water. The X, XJ and S are long in the tooth; only the S is close to emerging from reconstructive surgery (Spring ’08).
What’s more, 4Car reports that Jaguar’s bosses have yet to sign-off on a new model range. And no wonder. While there’s talk of axing the XJ in favor of a crossover or resurrecting the F-type, Jaguar’s current product mix has trapped the upmarket brand in down-market Hell. Taking the X and S out of the portfolio would be catastrophic.
All of which leaves Jaguar where it’s been for the last seven years: an open wound draining Ford’s precious bodily fluids. It’s time– past time– for the pain to stop. Ford’s not-so-freshly- minted CEO Alan Mulally continues to talk about his company’s need to “face reality.” The reality is that Jaguar is a lost cause Ford can no longer afford.
[This piece replaces an editorial based on factual inaccuracies. I apologize to Jaguar, and to those of you whose comments disappeared along with the previous piece. Please feel free to repeat your remarks below. RF]
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