Ford Pumps Big Bucks into JagUar

FRANKFURT December 23, 2005; Reuters reported that Ford Motor Co has injected another 1.2 billion pounds ($2.1 billion) into Jaguar Cars to cover heavy losses and investment writedowns at its British luxury car subsidiary, the company said on Friday.

The move marks the second time within two years that the number-two U.S. carmaker has had to recapitalize Jaguar, which has battled weak sales.

"The 1.2 billion pounds is correct as a recapitalization," Jaguar spokesman Don Hume said, confirming press reports.

"It takes the form of preference shares issued to Ford Motor Co. If nothing else it underlines, despite recent rumors, Ford's ongoing commitment to Jaguar," he added, but would not comment on whether more such operations might be needed.

Jaguar's unconsolidated British operations made a pretax loss of 430 million pounds in 2004 including an asset impairment charge of 173 million. That narrowed its 2003 loss of 601.1 million including an impairment charge of 534 million.

The U.S. group does not break out separate profit statements for Jaguar, which in September declined to repeat its earlier forecast that it would break even by 2007.

The move by Ford to prop up Jaguar is no surprise given the expensive restructuring the leaping-cat brand is working through, but it poses another headache for Ford managers grappling with problems on the home front.

Ford is set to announce next month sweeping job cuts and plant closures in North America to address mounting losses on its car business there.

Ford bought Jaguar in 1989 for 1.6 billion pounds but has struggled to make money with the brand, part of its Premier Automotive Group. PAG also includes Volvo, Land Rover and Aston Martin.

PAG had a third-quarter 2005 pretax loss of $108 million.

PAG and Ford of Europe head Lewis Booth told Reuters this month that Jaguar was not for sale despite market talk of this.

Under pressure to curtail losses at Jaguar, Ford last year cut 1,150 Jaguar jobs in England, scaled back production at the Browns Lane plant in Coventry and shifted output to another factory near Birmingham.

Now Ford is considering the sale of its historic Browns Lane plant that was the home of its iconic Jaguar brand since 1928.

Acknowledging that it was building too many cars, Jaguar last year lopped 15,000 units of planned output to help shore up pricing power in an increasingly competitive premium car market.

It also pulled out of the U.S. daily rental business this year as it adjusted production volume to meet demand.

Jaguar sales in the key U.S. market fell 15.5 percent in the first 11 months of this year to 42,458 units, while new car registrations of Jaguars in Europe contracted 23.1 percent to 43,045 cars.