Ford May Soon Sell Aston Martin, As Jaguar Languishes

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Ford May Soon Sell Aston Martin, As Jaguar Languishes

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Ford Motor Company may sell its Aston Martin luxury performance car business for as much as $865 million in the coming days, The Times is reporting. The sale comes as recent regulatory financial filings show Jaguar hemorrhaged $1 billion in losses in 2005, the last reported year. Aston Martin and Jaguar, together with Land Rover and Volvo, make up Ford's luxury Premier Automotive Group.

The report said the primary contender for Aston Martin is the Formula One racing team Prodrive, backed by Egypt's Naeem investment bank. The report indicated that other potential buyers, such as private equity firm Doughty Hanson could still prevail if Prodrive drops or is unable to finance its bid.

The sale of British Aston Martin, based in Gaydon, Warwickshire, could bring in much needed cash for Ford, which in the midst of a wrenching restructuring to eliminate excess capacity and focus on profitability. The Dearborn, Michigan-based automaker lost $12.7 billion in 2006, and has mortgaged essentially all of its assets to secure $23.4 billion in credit to allow it to carry out its turnaround plan.

Premier Automotive Group, which is based in London and has its North American headquarters in Irvine, California, saw total losses of $327 million in 2006, compared with a loss of $89 million in 2005, the last year for which results from the Jaguar and Land Rover units are available. In 2005, in comparison to Jaguar's $1 billion loss, Land Rover posted a profit of more than $110 million. Jaguar is headquartered in Coventry, while Land Rover is based in Solihull.

The Times reported that the Aston Martin business is projected to bring in a 2007 profit of $74 million, making it the rare bright spot for Ford's Premier unit. For February, Ford endured double-digit drops for both Jaguar, down 28.3% and Land Rover, down 10%. Volvo, headquartered in Gothenburg, Sweden and widely believed to be Premier's most successful business, held sales steady for February.

For Ford's Premier, February was an especially tough month, not only in terms of sales, but also in terms of ego. In contrast to Premier's steep sales drops, Lincoln, Ford's domestic luxury brand, which was ousted from the Premier unit in 2002, saw sales rise 10.8%. More than 2,300 new Lincoln MKX crossover SUV were sold in February, bringing 2006's tally to just over 4,000.

The significant weakness in its Premier business, coupled with stiff competition against its mainline marques, is having a profound financial impact on the company as a whole: in 2006, the Ford saw the worst twelve months, financially, in its century-long history.