Ford Motor Co. has been promising that its Premier Automotive Group luxury division will deliver 30 percent of group profits by mid-decade. Following news last week of PAG's $362 million second-quarter loss, that goal now seems elusive, to say the least.
PAG Chairman Mark Fields needs to fix the luxury brand division -- fast. The biggest problems are at Jaguar, which, ironically, is losing money despite setting new sales records every year. Ford's plans for the British brand have been ambitious. The losses reflect growing pains associated with those ambitions.
Jaguar has a patchy lineup of vehicles that have little in common with each other or with vehicles at PAG's other brands: Aston Martin, Land Rover and Volvo. Fields has made finding more common parts a priority, but the brands have been slow to deliver. But sharing engines and transmissions with Land Rover is a good start.
Jaguar also has too many factories: three. It will need to address its capacity problem if it is to remain competitive. Closing any of its plants will be painful, but probably necessary sooner or later.
In the short term, Jaguar can take other cost-saving steps. Abandoning its dismal Formula One racing effort would be a good place to start. If Jaguar needs to race, it should consider Le Mans, a far cheaper option than F1 and closer to Jaguar's roots.
Ferdinand Piëch of Volkswagen once said there's no point in a manufacturer going racing if it doesn't intend to win every time.
Jaguar's underfunded effort doesn't stand a chance against Ferrari. Worse, the racing program could become an unfortunate metaphor for Jaguar's larger commercial fortunes.