Car brands die.. so might Jaguar...

[ozpont]

.... incase your thinking of running out and buying a new Jag... ... read on....

Ailing brands can limp along for a while, but sooner or later, they are revived or acquired...... Or they die.

That’s what happened to East Germany’s Trabant. It almost happened to MG and Rover, but the Chinese came to the rescue. It could happen to Jaguar.

Ford Motor is seeking a buyer for its Jaguar and Land Rover brands. Jaguar is clearly the more difficult to sell. Because it is such a financial black hole, Ford may end up finding a buyer only for Land Rover and not for Jaguar.

That scenario opens a dire possibility: the demise of the Jaguar brand. It is no longer unthinkable. Ford turned around Jaguar’s once-appalling quality problems but it hasn’t been able to fix its finances. As a brand, Jaguar is appealing. As a business, it is a disaster.

Ford’s reason for wanting to sell its two British brands is clear. It needs to focus on its core business: selling volume cars.

Any deal must be completed quickly to maintain employee morale.

And the longer Ford holds on to Jaguar, the lower its value and the higher the cumulative operational losses at the British carmaker. Those losses eat into Ford’s precious cash reserves. It knows it cannot hold on to Jaguar indefinitely.

DaimlerChrysler set the standard for speed in divestments by finding a buyer for Chrysler in three months. Ford, on the other hand, took almost a year to sell Aston Martin, another luxury brand in its Premier Automotive Group

If Ford raises some cash on the sale of its luxury marques, so much the better. But now that the sell decision apparently has been made, it is more important to get rid of the two brands than to get the best price for them.

Matters are complicated by the vastly different valuation of the two marques. UBS, an investment bank, put a value of $2.7 billion (about €2 billion) on Land Rover last year, while rating Jaguar at a negative $947 million.

What if?

If Ford cannot sell Jaguar, it may be forced to abandon it. That would at least end the horrendous cash burn and allow senior management to devote full attention to the core business. A sale or closing would also halt the drip-drip torture of bad press eroding consumer confidence in all Ford brands.

But killing Jaguar would hurt Ford’s reputation in the important UK market. For seven years straight, it has been voted the most trusted car brand by Reader’s Digest here.

And the one-off costs, which would include compensation for dealers, would be high.

Clearly, it is far better for Ford to sell a functioning Jaguar. Even at a loss, it is still preferable to sell it just to get it off the books.

But if that doesn’t work, Ford may have no other option but to cut its ties to Jaguar and kill the brand.

So if somebody offers to haul Jaguar away for a fee, Ford should pay it -- and then bless its good fortune.