The latest deals may be the last spinoff of brands acquired in the '90s by then-CEO Jacques Nasser and predecessors. Mulally says he plans to keep Volvo. The company last March committed to selling its Aston Martin brand to a British consortium for $848 million.
Analysts say the sales--if painful, since the prices were far less than what Ford paid for the iconic brands--are critical, to raise both money in Ford's coffers (the company lost $2.7 billion last year) and confidence on the street.
"The reality is, how can you be convincing to the media, to Wall Street, and internally to employees that you are 100% trying to fix the core brands--Ford, Lincoln and Mercury--when you have these other brands that need to be fixed as well?" says Wes Brown, analyst with L.A.-based IceOlogy. "The reality is, if your house isn't fixed, how can you be looking at landscape design for the garden? Having Jaguar and Land Rover--and having them do well--is irrelevant if you are out of business."
The brands were part of Ford's Premier Automotive Group, the Irvine, Calif.-based umbrella for Jaguar, Land Rover, Aston Martin, Volvo, and--at one time--Lincoln. Jaguar has fared the worst. Its trajectory has been the opposite of Land Rover's since the millennium. While the latter brand has found its footing with Range Rover, LR2 and LR3, Jaguar has seen tepid reception of its vehicles and plummeting sales since the late 1990s. Jaguar sold 15,683 vehicles last year, a 24.2% drop versus 2006. Land Rover sales were 49,550, a 3% gain.
Rebecca Lindland, auto analyst with Global Insight, Lexington, Mass., says Rover and Jaguar won't see easy sailing, even with cash from Tata, because the former--although faring better than Jaguar--is an SUV brand, and the latter has been dying on the vine for such a long time it will take billions to bring back.
"Certainly there's an issue with Land Rover because if CAFE [corporate average fuel economy] standards are coming in, depending on environmental issues, the brand could really be in trouble," she says, adding that although Tata has said it plans to leave the brands' management alone, "The Warren Buffet approach only works if the companies are well-run. Jag has been losing money for years. Everything needs to be a home run for this company to turn around."
As an example, using Ford and GM's home-grown luxury marques: General Motors spent dearly to bring Cadillac back from the edge of the grave five years ago. Ford attempted to keep Lincoln viable with a far lower spend. Cadillac sold 214,726 vehicles last year, making it the No. 3 lux brand in the U.S. after Mercedes and BMW; Lincoln, even with a 9.1% sales increase last year versus 2006, only sold 131,487 vehicles last year.
By contrast, Lexus sold 200,334 vehicles; Mercedes sold 253,433 vehicles and BMW (excluding Mini) 293,795 vehicles in the U.S. in 2007.
"General Motors spent billions to bring Cadillac back; Ford tried to revise Lincoln on the cheap; that doesn't work. You have to spend billions and get it right: design, powertrain, production, ads--everything needs to be right and that takes both time money and people."
How far has Jaguar slid? Per Global Insight, Jaguar has lost 50% of sales volume in the States 1999-2007--from 35,000 units to 15,000--while almost every other luxury brand has gained over that time. The Jaguar S-Type only accounted for 3,500 units sold last year, versus 15,000 in 1999, and 25,500 in 2000, per Lindland.
"We are expecting redesign this year, but they haven't sold above 9,000 units of that vehicle in three years," she says. The same holds for the XJ sedan--the latest version of which came out in 2003--which peaked at 10,500 vehicles sold in 2004, and last year sold 4,400 units.
And the X-Type, the car Jaguar launched in 2001 as a high-volume entry car to compete against BMW's 3-Series car, and Mercedes-Benz C-Class, peaked at 33,000 in the U.S. in 2003. That year the company sold 50,000 of the cars worldwide. It had hoped to sell twice as many. Last year, sales of the car fell 90% to 3,198 units delivered.
Lindland says rebuilding won't be easy for Tata for another reason: the shine is off the industry, at least for now. "There was tremendous growth in the market between 1999 and 2005," notes Lindland. "We aren't expecting the market to do that for five to seven years."
Brown says if anything can save Jaguar, it's the brand's equity. "From research we have done with the Jaguar brand, it still has tremendous cachet; it still has a strong image. The reality is if you put the right product in there, it would see some success very quickly," he says.