Ford Motor Company:
Automotive News Europe is breathlessly reporting that Ford is to receive at least six bids for its Jaguar and Land Rover operations. AutoNews sources British press – Financial Times, Economic Times and the Daily Telegraph – in lining up the names of the bidders
The bidders include the usual suspects from the capital equity world including Cerberus Capital Management – the new owners of Chrysler Group and Tower Automotive in addition to Delphi and half of GMAC, Ripplewood Holdings and One Equity Partners.
Carmakers thought to be in the running include Hyundai Motors from Korea, Tata and Mahindra& Mahindra from India
Automotive News reports that “Ford said today that it has had contact with interested parties and is evaluating the level of interest, but declined to provide details on the potential bidders or give a timeline for any sale.”
Reports are that the sale price was expected to be on the order of $1.5 billion. Given the price Ford paid for Jaguar (about $2.5 billion i the late ’80s) and Land Rover, this seems to be petty cash. Land Rover is doing very well these days and a price as low as $1.5 billion has to be in recognition of a huge discount assigned to Jaguar. Recent speculation has been that the third brand in Ford’s Premier Automotive Group – Volvo – could bring $8-billion or more should it be sold.
There have been rumors circulating recently about BMW buying Volvo Cars from Ford. Ford Motor Company stated on May 29, 2007 it is not in discussions with BMW or any other company regarding the sale of Volvo Cars.
But sometimes where there is smoke, there is fire. This rumor has been circulating for a few weeks now. The rumor goes like this… BMW has been conducting due diligence about the possibility of acquiring another brand. Volvo Cars and Alfa Romeo have both been included in the rumor, but Volvo appears to be the strongest candidate.
Why Would BMW Need a Second Car Company?
From 1994 through 2000 BMW owned Rover – including Rover, MG, Rolls Royce, Bentley, Mini, Land Rover and the defunct names Austin, Morris, Riley, Triumph, Wolesley. Whoa, what a lineup!? BMW practically owned the British motor industry with the exception of Jaguar. Termed “The English Patient”, Rover and BMW never gelled. In 2000, BMW sold Rover Cars (MG Rover) to Phoenix Holding Group for £10. They sold Land Rover to Ford for a hefty chunk of change. They got snookered out of the Bentley name and somehow Volkswagen ended up with it. They kept Mini and have made it a great success. They kept Rolls Royce and are presently building modest numbers in Goodwood in sourthern England.
But, BMW needs additional volumes to help its economies of scale. A second company would help BMW in negotiations with components suppliers. Volvo has the heft to help handsomely.
BMW Fiercely Proud of its Independence
BMW is advertising the advantages of its independence. They look down their nose at Lexus – part of Toyota, Infiniti – part of Nissan, Acura – part of Honda, Audi – part of Volkswagen, Mercedes – part of DaimlerChrysler. So, the idea of BMW acquiring some other premium brand has to be considered from the position of strength.
European media reports have speculated that BMW wants to expand its product portfolio, and would like to add a premium brand with front-wheel-drive models to help spread out development costs for its Mini range. (BMW has been spreading some costs already co-developing the new Mini engine with Peugeot).
Volvo could be a good candidate to fill that objective. One of the reasons Ford acquired Volvo was because of its excellent front-wheel-drive large car platform that underpins the S80, XC90, S60, V70, XC70. Ford uses this platform for its Taurus (Five Hundred), Sable (Montego) and Taurus X (Freestyle) vehicle lines. The lower Volvo models have platforms shared between Ford, Mazda and Volvo. How a BMW acquisition of Volvo could untie these relationships must be a central part of any acquisition strategy. (Remember, BMW V8s powered the Range Rover until the 2006 model year – a hang over from BMW’s ownership).
Volvo Part of Ford’s Premier Automotive Group
Ford acquired Volvo in 1999 for $6.5 billion and made it a cornerstone of its Premier Automotive Group which also includes Jaguar and Land Rover (purchased for $2.7 billion in 2000). Ford has sold the fourth PAG brand – Aston Martin – to investors for slightly less than $1 billion. PAG lost $327 million in 2006.
Reports say that Merrill Lynch estimates Ford could raise over $9 billion by selling the remaining PAG brands.
Nobody’s admitting anything yet, but lets see if the denials hold up over time.
Toyota sold more cars and trucks globally during 1st Quarter 2007 than General Motors. For the first time in 79 years General Motors’ global sales have been topped by a major competitor.
GM’s Global Sales Leadership Crown in Jeopardy
During the 1st Quarter Toyota sold 2.35 million vehicles compared with 2.26 million vehicles for General Motors. This shift had been forecast to occur during the 2007 calendar year, but not as early as the 1st Quarter.
Toyota sells Toyota, Lexus and Scion vehicles in the USA. Major stakes in Daihatsu and Subaru are not included in the global sales totals. General Motors sales includes Chevrolet, Pontiac, Buick, GMC, Cadillac, Saturn, HUMMER, Saab, Opel, and Vauxhall.
VehicleVoice Research Indicates Toyota will Continue to Gain on General Motors in USA
In VehicleVoice brand image and consideration research reported on April 16, 2007, positive consideration for Toyota in the USA was 54% compared with 42% for General Motors as a whole. Consideration for Ford Motor Company products was 44% and Honda products was 53% in the same study. While Toyota continues to be a distant second or third to General Motors in the USA, this continuing level of strong positive consideration indicates that Toyota should be able to continue to close the gap year-by-year.
New Products in USA Bolster Toyota’s Position
In 2006 and early 2007 Toyota launched or renewed a slew of vehicles in the USA. The new Yaris small car replaced the under-performing and unfortunately styled Echo. The FJ Cruiser was launched to rave reviews and strong sales. The Camry was all new and earned the Motor Trend 2007 Car of the Year Award. The all new Lexus LS460 has arguably established a new luxury car benchmark in the premium luxury car market in the USA. And we can’t forget the launch of the all-new Toyota Tundra full size pickup. Tundra finally becomes a fully-competitive half-ton pickup for 2007. While still lacking 3/4 and 1 Ton models, the Tundra should give its half ton competition a run for the money.
Can GM Hold off Toyota?
While the annual global sales figures are still months away, Toyota may, indeed, be able to wrest the global sales crown from GM this year. General Motors is moving aggressively to add capacity and sales in China. If this comes on stream quickly enough, GM may be able to parry the threat.
During the last week of March 2007, 1,254 VehicleVoice panelists responded to an Internet survey concerning their opinion of major automakers in the USA. VehicleVoice asked these questions because the opinion of buyers and their attitudes towards various aspects of a manufacturer’s image are critically important. Managing image and opinion plus understanding what is driving that opinion can influence whether a person will positively consider or reject a brand next time they are in the market.
The key question in the VehicleVoice survey was whether the respondent’s opinion of a manufacturer had changed since this time last year. If their opinion had changed, the panel member was given the chance to explain why their opinion had changed. We received over 5,000 comments concerning these manufacturers. Some were as short one word. Some were as long as a page of 10-point type. Folks really had a lot to say and their comments were fascinating.
Discussion for each of the brands is below the fold.
As Ford Motor Company’s Way Forward program “progresses” more hourly and salaried workers leave the Company. One enterprising minstrel has recorded the Way Forward Song. It is worth a listen.
Click on the link above to listen in.
As a reminder, the January 2006 Ford press release detailing their Way Forward Program is shown below the fold:
Montego Gets A New Engine, A New Look, and An Old Name
Having decided that they cannot afford to give up the equity of the Taurus and Sable names, with the 2008MY facelift, these names return (click here for our comments on Ford’s name changes, as the Five Hundred gets renamed Taurus and Freestyle the Taurus X). Ford presented these changes at the 2007 Chicago auto show complete with all the statistics backing up the fact the customers don’t know what Montego is, but they know Sable. To the tune of three times as many consumers recognizing the Sable brand as the Montego brand. At least the name, as this new Sable is nothing like the first twenty years of Sable. In summer 2007, the Sable returns to dealers, and Mercury will have to find another excuse if sales don’t pick up.
What the statistics don’t do is explain why a consumer coming into a Mercury dealer looking for a Sable would not be convinced to buy a Montego or Milan. If Montego sales have been disappointing to Ford, a name change is not the magic wand to fix the problem. Mercury stands a good chance of selling more Sables than Montegos more because of the product changes that come along for the 2008MY than the name game.
The biggest shortcoming of the Montego was its weak powertrain, which was more bland than its styling. In fact, the 2006 Montego won AutoPacific’s first Ideal Vehicle Award by virtue of its great package and ergonomics. With the 2008MY Sable, a 260HP 3.5L DOHC 24v V6 replaces the launch 3.0L V6, gets a six-speed automatic transmission, and delivers this extra power without a decrease in fuel economy. There is an exterior and interior update to go with the name and powertrain changes. Suspension setup doesn’t change, but was revised and retuned, and there is a new power steering system with an intelligent electric pump. All-wheel drive is still offered, but is a new system now that the CVT is gone.
The new front fascia and headlights takes cues from Mariner and Mountaineer, successfully dressing up the Sable. Taillights and rear fascia are also revised, and there’s more chrome to be found. Overall, the exterior changes give the Sable more sophistication than the Montego carried, and the updates to the Sable are the most successful and attractive of the three new models (Taurus and Taurus X also received similar updates). We also notice that Mercury the Sable name in more places and more prominently on this new version than they did Montego badges on that car; Sable is on the rear decklid and both sides of the car. The Montego wore its name only on the rear. That alone will make it easier for consumers to know what they are looking at.
Inside, changes include a revised sound package for much-improved NVH. The options list expands to include Ford’s new voice-activated hands-free in-car communications system, Sync, developed with Microsoft and a standard auxiliary input jack. The Sable also gets optional two-tone interior with contrast stitching, taking a page from the Milan and Fusion’s interior schemes.
The updates to this vehicle promise a more competitive vehicle, with a more interesting exterior look and a powertrain that competes in today’s market. At the end of the day, Sable’s success will be all about the product, just as Montego’s weak sales were all about the product. A good name won’t sell a bad product just as much as a bad name won’t slow sales of a great product.
Before dawn on Saturday October 21, 2006, Ford opened the Premier Automotive Group and Mazda North American Operations campus to “Croissant Derelicts”. It was a stunning success with over 350 cars on display.
As you might remember from last week’s story, the Irvine Company kicked the “informal” Saturday morning car show out of the Crystal Cove Promenade on Pacific Coast Highway in Orange County, California. Too much congestion, too much noise, blah, blah, blah. Ford steps in offering up its nearby campus adjacent to the upscale Irvine Spectrum, but not nearly as muy elegante as Crystal Cove.
John Clinard, Ford’s Regional Manager of Public Relations was the principal driver of the event. Hats off to John. He really knows how to pull the folks together.
Would they come? ABSOLUTELY! In an in-your-face showing to the Irvine Company, car enthusiasts in Southern California flocked to the new venue in Irvine which is about five exits south of AutoPacific’s headquarters in Tustin.
An eclectic array of cars is on display every Saturday at Cars & Coffee
The London Times reported on Saturday August 26 that Jac Nasser, former Chief Executive of Ford Motor Company, has expressed interest in acquiring Jaguar/LandRover/Aston Martin from Ford. Nasser is now a partner in One Equity, a venture capital firm associated with JPMorgan Chase.
Nasser weighs in with a relationship with experienced venture capital and finance sources plus over 30 years of hands-on day-to-day working at a major carmaker in ever more senior positions. Nasser was chief executive of Ford Motor Company for three years before falling prey to the Explorer/Firestone tire failure debacle of 2001.
Nasser One of Many Interested in Jag, PAG or a Combination
Nasser joins Sir Anthony Bamford, head of Britain’s JCB as possible suitors for Jaguar. Bamford has specifically excluded Land Rover and Aston Martin from his interest, but Nasser is intimately familiar with Ford’s Premier Automotive Group that was established when he was at the helm. Of course other suitors may include the Russians and Nanjing Auto (exclusively reported by VehicleVoice).
Nasser, known as Jac the Knife during his Ford career (a monicker he does not like), could bring considerable expertise to the PAG crew. Land Rover and Aston Martin are doing very nicely, thank you, but Jaguar is a basket case sorely in need of new thinking from a product standpoint. Leave Land Rover alone.
Jag Needs Help From Folks Not So Close to Its Business
But Jag is a different matter. Even though the XJ Premium Luxury Car is relatively new and an outstanding product under the skin, it look too much like its predecessor. A major styling freshing was needed even before it was introduced. Consequently the new XJ has floundered. Similarly, the new XK Sports Car looks like its predecessor and has a Ford Taurus grille. Needs a quick front end facelift. Kill the X-Type quickly before it does more damage to the Jaguar brand. Renew the S-Type ASAP… presently in the cycle plan but too late. Needs to be pulled ahead.
Stay tuned to VehicleVoice as this intrigue unfolds over the next several weeks.
As VehicleVoice intrepidly reported last week, it appeared that Nanjing Auto had stepped in to acquire Jaguar and Land Rover, but hold your horses!
Now, after his diesel powered land speed record car set a new land speed record (improving the old mark by about 100mph), Sir Anthony Bamford, chairman of construction equipment company JCB, has expressed an interest in buying British luxury automaker Jaguar from Ford Motor Company.
“If they can separate Jaguar out [from Land Rover] then I’d like to buy it,” he was quoted as saying in an August 24 London Times media report. Now maybe Sir Anthony was a bit euphoric over his land speed record, or over the champers consumed afterwards, but this may be more than smoke.
Bamford says that he wants Jag, not Land Rover (the profitable part of the duo). Probably because he could get Jag for a song and would have to pay beaucoup blue sky.
Ford may not want to unbundle Jaguar from Land Rover and Aston Martin – Ford’s two other English Premier Automotive Group brands – because of the level of product integration the three brands have achieved in the UK and in the USA. Ford may try to insist that selling embattled Jaguar may only be possible as part of a deal involving Land Rover and Aston. Bamford is quoted in the London Times as saying, “If they sold Jaguar to me, Ford could then make a lot of money by selling Land Rover. Selling the two together won’t make much because Jaguar is regarded in the world as a dog,”
Ford has thrown billions of dollars at Jag since it bought the British automaker in 1989. After an auspicious start when Ford’s purchasing wizards helped Jaguar achieve spectacular cost and quality improvements, Ford has not shown that it understands a premium luxury brand much. The new XK and XJ are great cars mechanically, but not changed enough from ther predecessors in styling to turn heads to the degree required at the top of the market. “Perhaps we were too conservative,” said a highly placed Ford of Europe executive. Every Mondeo-based Jag X-Type sells hurts the Jaguar image incrementally. The S-Type, the middle of its range and worthy of selling substantial volumes, its almost-cartoonish styling has aged rapidly and is sorely in need of replacement.
Forbes Magazine reports that “Sir Anthony–whose father started JCB in 1945, before he himself turned it into one of the world’s largest manufacturers of earthmoving machines–may be the most credible candidate to date. JCB is a family owned, private company. It’s also very profitable–it made £110 million ($208 million) in 2005–and currently builds 45,000 vehicles each year.
Bamford is also a Jag enthusiast. “I knew [Jaguar founder] Sir William Lyons, who was a friend of my father’s, and he was involved in most aspects of the plant. JCB is run in a similar way. Although we are not in the car business, we are familiar with every aspect of lean manufacturing and worldwide marketing. All our senior management are involved in every aspect of the business. There isn’t an enormous structure and bureaucracy,” he told the 4Car Web site.
The Englishman is also bubbling with ideas for the brand. He proposed reconnecting future models with the company’s racing roots, criticized Ford’s decision to cancel plans for an F-Type roadster and suggested Jag needed downsizing.”
Also in Bamford’s arsenal is Mathew Taylor former managing director of Land Rover. With Taylor in the fold, JCB has the basics for a deep understanding of the inner workings of Ford’s English PAG brands.
Ford has all but guaranteed the demise of its luxury Lincoln brand through a series of strategy, marketing and product blunders not recently seen in the American car industry. In effect, Ford has forced Lincoln’s suicide. While we would like to write the epitaph now, Lincoln’s death seems like a long, slow, painful trauma that will provide fodder for the business press for the next decade. VehicleVoice counts the various ways Lincoln has been killing itself over the past couple of years.
Lincoln Shoots Itself in the Stomach by Cancelling V8 engine on 2009 Lincoln MKS (pronounced Em Kay Ess, not Mark S): This guarantees Lincoln will no longer be a luxury brand but a premium brand like Acura or Buick. Maybe the MKS will be an OK car, but with AWD and only a 260-plus horsepower V6 it can, at best, be an “almost-Acura-RL” which is off-concept at best. Even rumors of a range topping Twin-Turbo V6 with well over 300 horsepower will not offset the lack of the needed V8.
Lincoln Shoots Itself in the Shoulder by Cancelling the Lincoln Town Car: The Lincoln Town Car has not pretended to be at the top of the luxury car heap for decades, but with few improvements over the years, Town Car devolved into the Executive Car loved by livery buyers. Few Town Car sales were for personal use. So Ford allowed the Town Car to deteriorate from any Luxury Car pretenses it may have had, and become a luxurious black taxi driven by cabbies with ties. Just think what Ford could have achieved if they had implemented a major major change on the rear wheel drive Panther platform. New Town Car, New Grand Marquis, New Crown Vic… all built in Canada. Now, put in the 300HP 4.6L V8 and you could have a something to talk about