Ford bails out Jaguar with £1.2bn
12-23-05, 05:46 PM
#1
Lexus Fanatic
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Ford bails out Jaguar with £1.2bn
Ford bails out Jaguar with £1.2bn
US carmaker Ford has pumped a further £1.2bn into its UK subsidiary Jaguar to keep the luxury car maker afloat.
The money will come from the sale of preferred shares to its US owner, Jaguar said.
This week Jaguar posted a pre-tax loss of £429.3m for 2004, blaming tough market conditions and a £173m write-down of investments.
Carmakers worldwide have been suffering amid slowing global growth, high raw material costs and fierce competition.
"The recapitalisation underlines Ford's commitment to Jaguar, despite recent rumours," Jaguar spokesman Don Hume told BBC News.
Recent press speculation has suggested that Ford is considering offloading the Jaguar business.
Mounting losses
Mr Hume added that the £429.3m ($746.4m) loss for 2004 "underlined" why the company took the drastic action of closing its Browns Lane factory in Coventry.
However, the accounts were an improvement on 2003 when it revealed it was £601.1m in the red, mainly as a result of one-off charges £534m.
Much of the latest recapitalisation will go on paying off the 2003 and 2004 charges.
Reports added that part of the Ford cash will be used to reduce the £350m deficit in Jaguar's pension fund.
Meanwhile, the latest accounts do not include the cost of the recent shake-up of Jaguar's operations which are expected to come in at £75m for 2005.
Jaguar executives have hinted that the firm remains deeply in the red and losses are likely to continue amid "intensely difficult" market conditions.
The company, which has plants at Castle Bromwich in Birmingham, Whitley in Coventry, Halewood in Liverpool and Gaydon in Warwickshire, has already abandoned hopes of breaking even in the UK by 2007.
"Clearly we've made progress, but we will not break even by 2007," Mr Hume added.
Tough market
Jaguar is still lumbering under the weight of falling sales, high raw material costs and soaring wage bills - its wage bill surged to more than £1bn in 2004 from £740m a year earlier, The Independent said.
The paper added that without Ford's cash, Jaguar would no longer be a going concern as by 31 December 2004 it had "negative shareholder funds of £748.8m".
On the other side of the Atlantic times are also tough for parent company Ford.
In October it reported a third quarter loss of $284m, and it is currently struggling in a tough US car market which is beset by high petrol prices and reduced consumer spending.
Next month it is expected to announce huge job cuts and factory closures in North America to tackle rising losses at its US business.
Ford has struggled to make money with Jaguar since it bought the group for £1.6bn in 1989.
The luxury carmaker is part of Ford's Premier Automotive Group (PAG) which includes Volvo, Land Rover and Aston Martin.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/h...ss/4555468.stm
US carmaker Ford has pumped a further £1.2bn into its UK subsidiary Jaguar to keep the luxury car maker afloat.
The money will come from the sale of preferred shares to its US owner, Jaguar said.
This week Jaguar posted a pre-tax loss of £429.3m for 2004, blaming tough market conditions and a £173m write-down of investments.
Carmakers worldwide have been suffering amid slowing global growth, high raw material costs and fierce competition.
"The recapitalisation underlines Ford's commitment to Jaguar, despite recent rumours," Jaguar spokesman Don Hume told BBC News.
Recent press speculation has suggested that Ford is considering offloading the Jaguar business.
Mounting losses
Mr Hume added that the £429.3m ($746.4m) loss for 2004 "underlined" why the company took the drastic action of closing its Browns Lane factory in Coventry.
However, the accounts were an improvement on 2003 when it revealed it was £601.1m in the red, mainly as a result of one-off charges £534m.
Much of the latest recapitalisation will go on paying off the 2003 and 2004 charges.
Reports added that part of the Ford cash will be used to reduce the £350m deficit in Jaguar's pension fund.
Meanwhile, the latest accounts do not include the cost of the recent shake-up of Jaguar's operations which are expected to come in at £75m for 2005.
Jaguar executives have hinted that the firm remains deeply in the red and losses are likely to continue amid "intensely difficult" market conditions.
The company, which has plants at Castle Bromwich in Birmingham, Whitley in Coventry, Halewood in Liverpool and Gaydon in Warwickshire, has already abandoned hopes of breaking even in the UK by 2007.
"Clearly we've made progress, but we will not break even by 2007," Mr Hume added.
Tough market
Jaguar is still lumbering under the weight of falling sales, high raw material costs and soaring wage bills - its wage bill surged to more than £1bn in 2004 from £740m a year earlier, The Independent said.
The paper added that without Ford's cash, Jaguar would no longer be a going concern as by 31 December 2004 it had "negative shareholder funds of £748.8m".
On the other side of the Atlantic times are also tough for parent company Ford.
In October it reported a third quarter loss of $284m, and it is currently struggling in a tough US car market which is beset by high petrol prices and reduced consumer spending.
Next month it is expected to announce huge job cuts and factory closures in North America to tackle rising losses at its US business.
Ford has struggled to make money with Jaguar since it bought the group for £1.6bn in 1989.
The luxury carmaker is part of Ford's Premier Automotive Group (PAG) which includes Volvo, Land Rover and Aston Martin.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/h...ss/4555468.stm
12-25-05, 02:14 AM
#3
Originally Posted by PhilipMSPT
Not that unusual for US automakers. GM first, now Ford, and is Chrysler far behind?
Does anyone know how Volvo, Land Rover, and Aston Martin are doing? Are they suffering as much as Jaguar?
Does anyone know how Volvo, Land Rover, and Aston Martin are doing? Are they suffering as much as Jaguar?
Main problem is Jaguar due to too high expectations (meaning that they invested too much in the past without getting the required ROI), and that sales figures cannot be met.
IMO ... Jaguar's styling has been too conservative, leading that many potential customers don't like the X and S models.
Also note ... without exceptional strengths it is very difficult for Jaguar to beat the competition
X : competition is Lexus IS, BMW 3-series, Audi A4, Mercedes C-Class
S : competition is Lexus GS, BMW 5-series, Audi A6, Mercedes E-Class
12-25-05, 09:05 AM
#4
Lexus Fanatic
I'm not sure I agree that Jag's problem is the so-called " conservative " styling. Jag styling is praised throughout the auto press and the industry for being timeless, beautiful, handsome,and a refreshing change from the sweep-back, excessively aerodynamic, humpback-whale styling of so many competitiors.
I think the real problem is two-fold. First, the poor-reliability problem at Jag has again resurfaced in the last several years after being put to rest for awhile in the mid-late 1990's. Second, Jag, in spite of poor reliability, uses expensive materials to build their cars.....at a time whan they have tried to lower prices and introduced new car lines to stay competitive. For example, the wood and leather used in Jaguar products is carefully selected from company-owned and regulated trees and cattle, something that cannot be said for most auto manufacturers.....and they also use REAL chrome for their trim instead of the almost-universal chrome film-plated plastic that is cheaper and lighter.
I think the real problem is two-fold. First, the poor-reliability problem at Jag has again resurfaced in the last several years after being put to rest for awhile in the mid-late 1990's. Second, Jag, in spite of poor reliability, uses expensive materials to build their cars.....at a time whan they have tried to lower prices and introduced new car lines to stay competitive. For example, the wood and leather used in Jaguar products is carefully selected from company-owned and regulated trees and cattle, something that cannot be said for most auto manufacturers.....and they also use REAL chrome for their trim instead of the almost-universal chrome film-plated plastic that is cheaper and lighter.
Last edited by mmarshall; 12-25-05 at 09:10 AM.
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