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Premier Automotive merger sparks worry

LONDON - Ford Motor Co. is about to merge Jaguar, Land Rover and Aston Martin into a single business unit within Premier Automotive Group in a move causing concern over the potential for eroding their brand identity.

Sources say an "operating committee" of Premier Automotive Group executives established Oct. 31 will be reconstituted as a formal board of directors this week. Executive reassignments under the new British-brand corporate structure will be made in December.

Putting the three brands under one corporate structure could create savings by eliminating personnel and administrative overlaps. The three marques already have combined their operations in North America and Japan, with many executives having control over disciplines for all three brands.

With the reorganization, Premier would consist of two principal brand groups - the three British makes, and Volvo Cars. In an interview with the Financial Times newspaper, Premier Chairman Wolfgang Reitzle said the restructuring of the other group component - Lincoln Mercury - will become the responsibility of Ford's North American Operations.

A group insider who insisted on anonymity said he worries that the three British brands have little in common, negating any argument for combining them. Aston Martin is a boutique maker of performance sports cars; Land Rover is a premium sport-utility maker; and Jaguar, a luxury-heritage brand.

Despite the differences, the three will combine their engineering operations at Land Rover's headquarters in Gaydon, England. The automakers' design teams will work from the same styling studio in London.

One concern is that the plan will create a British Leyland-type organization, the former umbrella company for a host of British automotive nameplates that collapsed under the weight of its inefficiencies and marketing blunders.

Indeed, the sudden resignation of Jaguar Managing Director Jonathan Browning Oct. 31 is believed to have been triggered by his opposition to the new structure and his concern that it would undermine the carefully nurtured Jaguar brand.

Browning's replacement, Mike Beasley, has far less authority than did Browning, raising concerns that he will not be able to protect Jaguar from board decisions.

Bob Dover, chairman of Land Rover and head of the British group's operating committee, has added the Jaguar presidency, and a similar title at Aston Martin is forthcoming, a source said. Both Dover and Volvo Cars President Hans-Olov Olsson have been elevated to Ford Motor vice presidents, although both still report to Reitzle.

Under the Ford restructuring, Ford chief technical officer Richard Parry-Jones will become top product development man for Premier Automotive Group. He will be based in England, concentrating mostly on the British brands.

Ford is undergoing a massive restructuring, laying off thousands of white-collar workers in the United States. Premier Automotive Group is expected to be a major contributor to Ford's turnaround.

"What we are seeing are key steps leading to a structure other than the one they have with PAG. The building blocks are being put in place," said Karl Ludvigsen, an industry analyst based in London who specializes in Ford.

"I am not able to think of any reason why it wouldn't make terrific sense making PAG a single business unit with three brands."

You can reach Mark Rechtin at mrechtin@crain.com

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