PARIS -- The head of the luxury division of Ford Motor Co. said on Monday the unit may scrape into the black in 2003 and was on track to contribute a third of group profits by mid-decade.
"It is not out of the question that we could be profitable this year," Mark Fields, Chief Executive of Ford's Premier Automotive Group (PAG), told reporters in Paris.
Together with Ford's upscale Lincoln brand, PAG has been ordered by CEO Bill Ford Jr. to contribute more than 30 percent of group profits by the middle of the decade.
But the division, which includes the Volvo, Jaguar, Land Rover and Aston Martin brands, suffered an $88-million pre-tax loss in the first quarter of 2003, while Ford's North American business -- its Ford, Lincoln and Mercury brands -- turned a pre-tax profit of $1.2 billion.
Fields, who gained a reputation as a cost-cutter as head of Japanese car firm Mazda before he took charge of PAG a year ago, said the target still stood and would be reached by selling a wider range of high-margin cars and cutting costs.
"We will achieve our commitment to the group by working both ends of the profit equation -- growing the revenues, but then having a relentless view on eradicating waste," he said. He declined to give details.
PAG, whose models range from the humblest Volvo saloon to James Bond's Aston Martin Vanquish, will launch 35 new or significantly revised models over the next five years, including a new Jaguar estate car, which Fields said would probably be on the market early next year.
With three of Ford's luxury brands based in the United Kingdom, the company has suffered from the strong pound and weak dollar which make British products more costly to build and have forced it to source more parts from overseas suppliers.
Some of the group's luxury rivals such as Germany's BMW BMWG.DE boast of "natural hedging" -- building cars in the market where they will be sold to minimize exchange-rate effects -- and it is a strategy which Fields could envisage for PAG.
"We're not currently planning to build anything in the U.S., but in the future I don't rule anything out, particularly given current foreign exchange volatility," he said.
Many industry watchers wonder how Ford's luxury division will manage to lift volumes without diluting the image of the individual brands, especially as models share more components to keep costs down, a strategy Fields sees as a "huge opportunity".
But he said the shared components would largely be those the customer would not see, or would be tailored to suit each car, as with Jaguar's new XJ saloon, which shares braking and suspension systems with the smaller and older S-Type model.
Land Rover said late last year it would shed around 1,000 jobs in 2003 as it seeks to cut costs, but Fields said there were currently no plans to cut any production sites at any of PAG's brands.
He repeated that there were no plans to sell Volvo, despite constant media speculation to the contrary, and said Ford saw no need to buy any additional luxury brands.