Ford Bets Billions on Jaguar

Topics: Mercedes-Benz, Automotive industry, Ford Motor Company Pages: 4 (1581 words) Published: September 29, 2008

In the late 1980s, Ford strategists took a good look at the booming luxury-car market and realized they needed a global luxury brand to rival BMW and Mercedes-Benz. They considered acquiring several luxury brands. First on the list was Alfa Romeo. But Ford lost Alfa Romeo when Fiat intervened, with a little help from the Italian government. Fiat did not want Alfa, but did not want Ford getting it either. Next came Saab and Jaguar. Ford was negotiating to buy both luxury-car companies at the same time. But Harold "Red" Poling, then Ford chairman decided Ford could not manage two acquisitions at once, so Ford backed out of the Saab talks. That left Ford to pay $2.5 billion for Jaguar, a legendary brand that had limped along through the 1980s as an independent after being mismanaged nearly to extinction by British Leyland. Jaguar had only two cars, and nothing in development but an ill-conceived sports car called F-type. And Jaguar was being wooed by other manufacturers at the time, most notably General Motors. John Egan, the Jaguar chairman who engineered the sale of Jaguar to Ford, said Jaguer and GM had been working together on plans for a joint car at the time Ford started buying shares.

"Ford's initial aggressive takeover was premature in that we were talking to other companies," said Egan. "When Ford contacted us we realized the game was up. We wanted to be sure we got a good price for shareholders. We came to the conclusion that of all companies interested, Ford was best." Had Ford planners realized how bad things were at Jaguar the company, they might have had second thoughts about taking on Jaguar the brand. "It wasn't that Jaguar's quality was bad, it was horrendous," said Bill Hayden, the tough east London manufacturing man Ford sent in as first Jaguar chairman in the new era. "It was a terrible organization making terrible cars," he added (Wernle 2003 p. 14). Problem Statement

Ford is struggling to stay competitive in the luxury car...
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