LONDON -- Ford Motor Co. is reviewing the structure of its Jaguar unit after a disappointing second-quarter loss for the Premier Automotive Group.
PAG swung to a $362 million (E296 million at current exchange rates) loss for April to June from a profit of $162 million a year earlier.
Don LeClair, Ford Motor Co. chief financial officer, said Jaguar is mainly responsible for the group's financial difficulties. He said PAG -- Volvo, Jaguar, Land Rover and Aston Martin brands -- will be lucky to break even this year.
Ford had hoped PAG would account for 30 percent of its global profits by mid-decade. PAG reported a pre-tax profit of $164 million for 2003, compared with a loss of $740 million in 2002.
"We're going to have to evaluate the Jaguar business structure," said LeClair. A group of Ford's senior managers will be looking at the business in the coming months.
Mark Fields, chairman of Ford's combined operations in Europe including PAG and Ford of Europe, will lead the effort. Joe Greenwell, chairman and CEO of Jaguar-Land Rover, will also be involved, as will Bibiana Boerio, newly named managing director of Jaguar brand.
Brutal US competition
Jaguar has suffered particularly from a combination of the weak dollar and brutal price competition in the US market. Jaguar cars, particularly the X-type, have not met the company's sales expectations. About 45 percent of Jaguar's 125,000 unit sales were in the US in 2003.
LeClair said the Jaguar restructuring would not be radical. But sources inside the company have said in the past that nothing is off limits, including eventually closing one of Jaguar's three plants in the UK.
But cutting capacity won't be easy, at least in the short term. The heart and history of Jaguar reside at Browns Lane in the British midlands, the company's historical headquarters starting in 1948 and once its sole factory. Sources last year told Automotive News Europe that Jaguar would consider closing Browns Lane. But Jaguar subsequently reached a deal with workers to build the next-generation XK sports car there. It is due in 2006. And Jaguar had already committed the new XJ to Browns Lane. The S-type is built at Castle Bromwich and the X-type at Halewood.
"There's no point in the world in Jaguar having three assembly plants," said a senior Ford source. BMW and Mercedes-Benz both make more vehicles in most individual factories than Jaguar does in three.