CHICAGO - A key player in Ford Motor Co.'s luxury car division said on Wednesday that "killer products" should help it overcome some of the profit-wasting problems it faces, including dollar weakness and the relative strength of the British pound.
Bob Dover, the managing director of Land Rover and COO of Jaguar and Aston Martin, spoke to Reuters at the Chicago Auto Show, where the mood was unusually somber this year amid Iraq war fears and warnings from Washington about another possible attack on U.S. soil.
Dover said he saw the three British brands increasing their sales by single-digit percentages this year and predicted that attractive new cars and SUVs, including the Range Rover and all-new XJ, Jaguar's flagship sedan, will lure buyers into a growing number of U.S.-based Jaguar and Land Rover dealerships.
"I think our view continues to be that if we continue to make killer products, iconic products that customers fall in love with, we can probably overcome the manufacturing issue and the currency issue. We can probably overcome it," Dover said.
U.S. sales of Jaguar, Land Rover and Aston Martin more than doubled in the last two years, and the British brands, which account for 10 percent of Britain's exports to the U.S. market, are expected to contribute a big chunk of Ford's profits going forward.
But Dover said dollar weakness and the pound's recent strength, which makes British products more costly to build, posed a huge challenge for the trio of luxury cars and SUVs.
"It's hurting us. It's hurting us quite badly," Dover said. By "hedging," or dealing in risky currency futures, he said Ford's British brands had been able to limit some of the damage from foreign exchange fluctuations to their bottom line.
But he said the companies also had been forced to use a growing amount of components from overseas, instead of buying from their traditional British suppliers, to help trim mushrooming manufacturing costs.
Just two and a half years ago, when Ford bought Land Rover, Dover said about 70 percent of its components were purchased in Britain.
"That figure is now below 50 percent, and we'll continue to look at sourcing in lower cost areas," he said.
Jaguar, Land Rover and Aston Martin, together with Volvo, form part of Ford's Premier Automotive Group. Dover said he and other executives are convinced that Britain will adopt the euro as its currency in another two or three years.
In the meantime, however, he said the British companies have little choice but to deal with currency volatility as best they can, since they have too much fixed investment in Britain to make the case for a wholesale move overseas.