Jaguar Aiming to Cut $1,000 Costs Out Of Each Car

BIRMINGHAM, England October 23, 2002; Brian Lysaght writing for Bloomberg reported that Ford Motor Co.'s unprofitable Jaguar unit wants to trim costs by as much as $1,000 a vehicle, or about $100 million, by reducing waste and sharing parts and supplies with the world's second-largest automaker's other brands, an executive said.

"We've got to take that order of magnitude out in order to have a sensible business plan," Jaguar Managing Director Mike Beasley said in an interview at the British Motor Show. He didn't give a timeframe.

Ford said last month that Jaguar will have a loss of about $500 million this year, mostly because of delays in producing the aluminum-body XJ sedan. The automaker will ship the first versions early next year, rather than in the fourth quarter of this year as planned, to ensure top quality, it said.

Ford, which bought Jaguar in 1989, is trying to recover from a $5.45 billion loss last year. In January it announced a plan to cut jobs, close plants and introduce new models to generate $7 billion annually in pretax profit by 2005. Its shares have declined 40 percent this year, second-worst after Fiat SpA among the world's major carmakers.

Beasley said the Jaguar will share distribution suppliers and facilities with Ford's Land Rover and Volvo brands, including shipping cars to North America from Volvo's factory in Ghent, Belgium.

Profitable Next Year

He said lost revenue from the delayed XJ car shipments will be recovered next year so that Jaguar should be very profitable in 2003. "I would be very upset" if that didn't happen, he said. "It's important to me that Jaguar pays its own way."

Sales of XJ sedan, which goes on sale next spring, should reach 25,000 to 30,000 cars next year, Beasley said. The company also expects to introduce its first diesel engines in the fourth quarter of 2003, Beasley said. The diesel market makes up a third of European car sales and is growing faster than the overall market. Rivals Bayerische Motoren Werke AG and DaimlerChrysler's Mercedes-Benz unit offer diesel-powered versions of all their models.

Jaguar sold 102,189 cars worldwide through September, passing its record sales of 101,000 for all of 2001. Most of the growth came from the midsize X-type car that was introduced last year.

Another of Ford's luxury brands, Land Rover, will meet its target of breaking even in 2002, said Robert Dover, Ford vice president in charge of the U.K. luxury brands.

"We're on track to do what we said we would do," said Dover, in an interview.