Archive for the 'Premier Auto Group' Category

iPod Generation NOT “down” with British Auto Brands?

Tuesday, May 29th, 2007

While reading an article from LeftLane News, we got quite a laugh after learning that many of America’s youth (the young-ish looking people with tattoos and iPods stuck to their ears) don’t recognize the Land Rover brand as British, nor do they recogize a competing brand, Lexus, as Japanese!

The article follows:

“58.4 percent of U.S. college students surveyed by Anderson Analytics believe Land Rover is an American brand. Only 18.5 percent of respondents correctly identified the marque as British.

Land Rover LR2


Where art Thou Mondeo?

Friday, March 16th, 2007

Our friends at Winding Road magazine recently spent the time and money to go to the Geneva Motor Show, one of the top motor shows in the world. Where there, they spotted the all-new Ford Mondeo.

We noted some months ago that Ford was opting not to sell their hot hatchback Ford Focus ST and Ford Focus RS in the USA, a market that craves large engines and fast cars. It is no wonder Ferrari’s number one market is the gas-guzzling American market. The Mondeo is no gas-guzzler. It is a well-designed and well-engineered family sedan, much like the Fusion in the American market. But make no mistake, it is most definitely not the Ford Fusion. What this represents is a poor marketing effort on the part of Ford Motor Company. It also signifies a synergy lost in a global company. Ford could save money by eliminating the Fusion and using the Mondeo in the USA. A smart move, but instead the company struggles and has to sell of its profitable Aston Martin division, and brand that did not fit into the streamlined strategy of the future Ford PAG.

The conclusion is that we should not be surprised about this ill-advised move considering they have brought back the Taurus name – a name synonymous with boring sedans.


Aston Martin: A Perfect Fit For Prodrive?

Wednesday, March 14th, 2007

On Monday, Ford announced that they sold their profitable brand Aston Martin to a consortium of buyers, including the owner of racing competitor Prodrive of the UK. This means that Aston now goes back to British ownership – at least partly. In addition, a well-known Aston Martin collector is investing in the buyout as well as two well-financed investment companies Adeem Investment Co. and Investment Dar, both of Kuwait. Ford will retain US$ 77 million (about 8.5% of the company). The whole deal is worth $925 in much needed cash for Ford Motor Company. Ford will still retain three brands in its Premier Auto Group: Volvo, Land Rover, and Jaguar. Ford has previously stated that Jaguar is losing money, and Land Rover (despite widespread quality problems) is said to be profitable. Both are known “British” companies.

As for Aston, we can expect to see some leverage on the buy-side of this deal. It is unclear if the two Kuwaiti investment companies are planning long-term investments, but a lot of leverage could mean a quick turn-around. Unlikely would be for David Richards, the chairman and founder of Prodrive, and John Sinders an Aston collector and racing backer, to resell the company in the short-term. Both seem to view this as a long-term investment.

Strategically, Ulrich Bez will remain the CEO of Aston Martin, and will continue to drive the product lineup in the future with the Rapide, a four-door Aston Martin, which will compete against the Maserati Quattroporte and the Porsche Panamera (due out in 2009). We should expect that plans for the Rapide will be accelerated to generate more revenue and better return on investment over the next few years.

On a final note, for those surprised by the Prodrive investment, we should note that Prodrive has considered investment in a production vehicle before. The well-known racing company commissioned a technologically advanced vehicle, the Prodrive P2. Prodrive couldn’t be bothered to put the sophisticated car into production, but we could view the purchase of Aston Martin as a foray into production sports cars. No doubt we could see Prodrive technology in future Aston Martins, thus giving Aston a specific product advantage.


Thoughts on Ford’s PAG

Thursday, March 1st, 2007

The Financial Times first reported in early January that Ford was considering selling the Jaguar unit of the Ford Premier Auto Group, the Ford Company’s luxury division. Jaguar has been in the Ford stable since the 1980s, the same decade that Ford began to assemble the PAG.

Alan Mulally told the FT, “All good businesses continually review their portfolio, and we will continue to evaluate ours going forward.” Good plan Alan! With that statement Ford is on the right track. But then again this statement comes weeks after Ford announced that they were looking for buyers of the Aston Martin name, PAG’s ultra luxury supercar division. Oddly, Ford’ Don LeClair told the FT just days later that Jaguar was NOT for sale. Clearly, Ford needs to get the corporate message packaged cohesively.

And that leads use to wonder if Ford is really taking its own advice. In evaluating the reasons for the sale, it is of no doubt that Ford is looking to sell the now profitable Aston Martin because it needs cash flow. A sale would generate short-term cash flow. This much is true. Still, Ford needs to consider the long-term ramifications of this decision. Aston gives Ford some degree of legitimacy in international racing, and no doubt Aston Martin in far more profitable than it has been in the past.

Ford has done an excellent job of turning around Aston Martin, which made only 43 cars in 1993. 2006 resulted in over 5000 Aston Martin sales. This is much contrasted with Ford’s 1989 purchase of Jaguar. Jaguar has struggled since its inception, and has yet to make any money for the PAG. It does however represent a Ford’s prestige motorcar presence in the auto industry. It is the only luxury auto unit that Ford runs outside of the USA, and the only one which is known and respected worldwide.

Regardless of what happens to Aston Martin and Jaguar, you can bet that Ford’s PAG will attempt to keep Volvo and Land Rover, both of which are profitable, in its portfolio. As we have said before, a sale of Aston Martin is mistake, and as likely is a sale of Jaguar.

Aston Martin No Good for Ford?

Tuesday, November 7th, 2006

Within the past week the Guardian Unlimited (a UK news source) has reported that up to 30 bidders could be vying to take over Aston Martin from Ford Motor Company. The source reported that this could raise the price of Aston to over $1.9 billion (£1 billion).

The revelation is not unexpected as Aston has been on the chopping block at Ford’s Premier Auto Group, which incidentally was the second largest segment for Ford Motor Company in the 2nd Quarter of 2006. A number of companies have passed including BMW and the Japanese companies. Some speculation had also been that management in a MBO would buy the company, but that seems unlikely now. The resounding sentiment seems to be that no existing, large car manufacturer needs to buy such a niche sports car maker to add to its stable. BMW did seem a likely buyer, as it also owns ultra-luxury maker Rolls-Royce and could have an ultra-luxury sports car maker. VW is obviously out as is Fiat since they have Lamborghini and Ferrari, respectively.

Again BeyondtheKM ask the big question, why not keep Aston Martin? As we’ve said in previous posts, Ford stands to benefit from having a sporty marque within PAG. They currently have a luxury SUV maker (Land Rover), a luxury car maker (Jaguar), and Volvo, which is mid-high end (and brand identified as “safe”) vehicle. Additionally, they have Aston Martin, a company that was really evolved and made it profitable and highly desirable. In short, Aston Martin is everything that the other Ford and PAG brands are not. They are an important piece of Ford’s diversification in the auto industry.

Like it or not, money or not, axing Aston Martin is the WRONG move. If anything Ford should look at home to its Lincoln and Mercury brands to find ways to sell them or cut them altogether and save money. Ford must also do a better job of integrating technologies and platforms with Volvo and even Jaguar. For sportier cars, Ford must borrow technologies from Aston. This serves to bring more buyers to Ford through a “halo” effect and it serves to keep Ford diversified and send money back to Ford through PAG, the most profitable companies of which are Aston and Land Rover – the “jewels of Ford,” if you will.

Commentary on the Possible Sale of Aston Martin

Thursday, October 19th, 2006

In 1986, Ford Motor Company bought 75 per cent of Aston Martin. In 1993, they bought the rest of the company from Victor Gauntlett. Since then, Aston Martin has been turned upside down. Barely is the company recognizable to fans of the Aston of yesteryear. Today the company is lean, innovative, and more or less profitable. The brand is stronger than ever, as are the sales figures.

In a lot of ways, the acquisition of Aston into Ford’s Premier Automotive Group was strategically sound long-term investment. Ford had needed a well-known company to purchase, one which could be bought on the cheap and turned around to reap long-term profits. The secondary benefit is that Aston brought a super car to the company that lacked one. Additionally technology that has started in Aston as motorsports technology has filtered down. Some technology has also been filtered to other companies in the Premier Auto Group portfolio. The Aston shares many design concepts and parts with Jaguar. Both companies are located in the West Midlands in what was long considered the heart of the British auto industry.

Aston Martin also had long-term potential in motorsports. In fact, Aston announced in 2003 that they would bring the marque to Le Mans starting in 2005. The efforts in motorsports and in rejuvenating the production car lineup have proven fruitful in adding value to the brand.

Despite all of the benefits of having Aston in the Premier Auto Group, Ford announced at the end of October plans to sell the luxury sports carmaker in an effort to raise capital. The question is: “is now the best time?” Hindsight is always 20/20, but the question is certainly valid. Ford has serious financial problems, to be sure, but dumping companies in which they have invested serious time and money to resolve short-term problems seems absurd. The fact is, Ford isn’t suffering because of Aston Martin, they are benefiting from having the company in the portfolio. Selling this company at this juncture with growth almost certain would be a bad move.

In a future posting, BeyondTheKM will examine the strategic moves that Ford may take in securing the future of the Premier Auto Group.