Thursday 25th January 2007

Ford financials make grim reading

But can James Bond help Jaguar's results?

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Jaguar XF: Bond's next steer?

Ford reported its results for 2006 today and they make grim reading.

It lost $12.7 billion, with sales income down by over $16 billion compared to 2005 to $160.1 billion -- it's the biggest loss in the Blue Oval's 103-year history.

While the troubles of Ford and the rest of the USA's big three motor manufacturers have been well-publicised, what Ford's figures also reveal is that Jaguar's contribution to the loss was a massive $715 million.

Jaguar plans to reduce that loss to $550 million in 2007 and $300 million in 2008, and to redeem itself with the newly-revealed XF, as well as the XK coupé and convertible. Given the reception afforded the company's new cars -- now it's abandoned the retro look -- this scheme looks so far to be on track, although it is early days.

However, the fact remains that Jaguar made only 75,000 cars in 2006, a flea-bite in global terms. And Jaguar must do well in the US especially, but its recent sales history is poor. According to Autocar, the high point was 61,000 sales in 2002, half of which were X-types. Yet 2006 saw sales slump to a mere 21,000 units. Only 5,000 of those were X-Types.

There is a bright spot on Jaguar's horizon however, apart from the sunny outlook for the 2006 models.

Ford has a contract to supply cars for the next Bond film. It's part of a $100 million three-movie deal that started with the 2002 film Die Another Day. It's a huge advertising platform. And now that Bond won't be driving an Aston Martin -- AM will be sold by then -- chances are that Bond will be helming a Jaguar XF. Expect that announcement to be made just as soon as the sale of Aston Martin by Ford is inked.

[bunglist]

Typical...........you cant have Bond Driving a Jag (no offense to Jag they are nice cars) but Bond should always be driving an Aston Martin or a Bentley.


Oh yeah that is a lot on dosh to loose in one financial year.

Edited by bunglist on Thursday 25th January 13:04

[havoc]

Ford's still working in old factories to an old-style financial model with too many people doing too little work.

Jag's a prime example of this - was geared up after purchase to produce 200k cars a year in 4 model-lines. Factories, support, design, engineering and admin functions were all grown in expectation of this. It never happened, and the overheads are strangling the company.

Also, the 'Ford' way is big-company high-volume stuff (naturally), but a 100k unit company doesn't need that sort of infrastructure or processes. Thing is, they're stuck with it...again, more waste!

[nickfrp]

will Ford become the new MG?? and go bust?

[sprinter885]

OK..so now I'm confused. Is that a picture of the new XF (as in S type replacement) or is it actually the C-XF concept shown recently??

[manek]

That's the C-XF - but it looks (says Jaguar) pretty much like the real thing.

[Fire99]

Can't comment much that hasn't already been said about Ford's financial situation but back in Fantacy land.. Bond driving a Jag??? Not sure about that.. Saying that he did drive a Lotus in a couple of films and i didn't get too upset.

If it's got lots of gizmo's i'm sure i can live with it..

Saying that (without focusing too much on Bond), the latest Bond film had 'Product Placement' all over the shop. Gave the film seem a bit like a commercial.

[Huw Pugh]

Whilst $715m is a hefty loss, it's actually an improvement on Jags overall finances. In 2004 they made a loss of £429m according to Companies House, so the $715m loss (which converts to approximately £312m) is a relatively good improvement.

[havoc]

Huw Pugh said:

Whilst $715m is a hefty loss, it's actually an improvement on Jags overall finances. In 2004 they made a loss of £429m according to Companies House, so the $715m loss (which converts to approximately £312m) is a relatively good improvement.

Do your sums again. $715m, at average rates for 2006 (which is what it'll have been converted at!) is more like £400m, so little improvement, although less volume which suggests they're starting to get a handle on the cost-base. They've been haemorraging that sort of money for about 3-4 years now...if it wasn't for Ford's deep pockets they'd have gone the way of Rover already.

[Sonic Nonsense]

I realise that Jag have far, far less sales volume than Ford, but $715 million as a precentage of $12.1 billion is only roughly 6%, so perhaps they have bigger problems than just Jaguar. Where's the other 94% coming from?

[mini_ralf]

article said:

Ford has a contract to supply cars for the next Bond film. It's part of a $100 million three-movie deal that started with the 2002 film Die Another Day. It's a huge advertising platform. And now that Bond won't be driving an Aston Martin -- AM will be sold by then -- chances are that Bond will be helming a Jaguar XF. Expect that announcement to be made just as soon as the sale of Aston Martin by Ford is inked.

Bloody disgraceful. Bond should be driving an Aston or a Bentley.

[fatboy b]

havoc said:

Huw Pugh said:

Whilst $715m is a hefty loss, it's actually an improvement on Jags overall finances. In 2004 they made a loss of £429m according to Companies House, so the $715m loss (which converts to approximately £312m) is a relatively good improvement.

Do your sums again. $715m, at average rates for 2006 (which is what it'll have been converted at!) is more like £400m, so little improvement, although less volume which suggests they're starting to get a handle on the cost-base. They've been haemorraging that sort of money for about 3-4 years now...if it wasn't for Ford's deep pockets they'd have gone the way of Rover already.

But no too long ago Jag lost $1 billion in a year, when the exchange rate was around $1.6 to the £. So that's £625 million, which means the £400 million last year is a big improvement considering the huge sales volume drop as well. Proves the "richer mix" phylosophy is working. Fewer sales, but more money.

Edited by fatboy b on Thursday 25th January 14:59

[havoc]

fatboy b said:

...the £400 million [loss] last year is a big improvement considering the huge sales volume drop as well. Proves the "richer mix" phylosophy is working. Fewer sales, but more money.

Possibly. But J&LR have been trying to get a handle on their cost-base for ages, and shut Browns Lane down in 2005. So it's possible the lower loss is entirely down to cost-savings not gross profit-per-vehicle improvements (although with new XJ and XK firmly in the mix I suspect that will be true also...need to get rid of X-Type completely first, as that's never been a great contributor).


As to the 'Jag's loss is only 6% of Ford's total loss' - true, but 75,000 units global is barely equal to UK sales of the Ford Focus (to put volume into perspective).
Ford will have made profits from LR, Volvo and AML. Ford's 'US brands' (inc blue oval itself) and Jag will have lost money. Mazda contribution...not sure, unlikely to be a big loss, possibly a profit. Ford Finance SHOULD have made a very tidy profit, although with the downgrading of Ford's bonds back in 2005 (? Think it was then ?) and later 2006, their cost-base (rate they can borrow money at) has gone up. Which suggests that the US brands (Ford, Mercury and Lincoln IIRC) really are in a bad way.

[MarkoTVR]

The article said:

According to Autocar, the high point was 61,000 sales in 2002, half of which were X-types. Yet 2006 saw sales slump to a mere 21,000 units. Only 5,000 of those were X-Types.

Yep, because I think almost everyone is bored of that look now. Classic Jags still look fantastic, but new Jags trying to look classic aren't going to cut it anymore. New cars need to look like new cars, with odd exceptions like the GT40 because of it's iconic nature, but even the new one has heavy modernisation despite the obvious design cues from the original.

The XF needs to come out like the C-XF looks now IMO, and there needs to be a fresh-looking saloon to 'complete' the line up, not something that still looks like a shrunken XJ6....it worked a few years ago, but the novelty has long since gone.

No doubt the manufacturing facilities and processes also need addressing from what has been suggested in some previous posts, but they also need to make something lots of people want.

Edited by MarkoTVR on Thursday 25th January 15:30

[dcb]

Huw Pugh said:

Whilst $715m is a hefty loss, it's actually an improvement on Jags overall finances. In 2004 they made a loss of £429m according to Companies House, so the $715m loss (which converts to approximately £312m) is a relatively good improvement.

True, but per car the numbers are IMHO horrifying.

I make it a loss of $9,500 per car sold, or about
£5,000.

What's the average price of a Jaguar ?

£30-35K ?

How long can Ford afford to keep Jaguar afloat -
given that they have been losing money for years
and there is no breakeven point in the forseeable ?

Only time will tell.

[ED965]

Its a shame, but if you take the mondeo for example, this was always the fleet favourite every mile muncher drove one before that the Sierra and Cortina.
Problem nowadays is the fleet managers are looking at residual values as well as initial costs, hence most comapanies have moved away from GM & Ford into German brands Audi BMW. I think the 3 series out sells a Mondeo now.
If you look at the RS brand it was always a popular choice over the years with the Cossie's etc and it stood for something, what have they now?
Mondeo ST, Focus ST, GONE BACKWARDS.
I always had Fords and still have a soft spot for the brand, but the brand gone Bland

Edited by ED965 on Thursday 25th January 16:26

[havoc]

Nothing much wrong with Ford's European products, it's their US and global products that aren't competing well-enough.

[pddmac]

Lets be accurate. These figures are for US operations. Ford of Europe are in the black. And their products are seeling on merit.
Regarding Jag's organisation being too heavy, i don't buy that at all. If you want to operate on a global scale, you need world class products, world class engineers, processes, etc. etc and that don't come on the cheap.

[valentin]

Well, I rather see Bond in the Jag XF than in a BMW Z3 or 750!!!!
An Aston does suit him much, much better tough!!!!

[trenchtown]

mini_ralf said:

article said:

Ford has a contract to supply cars for the next Bond film. It's part of a $100 million three-movie deal that started with the 2002 film Die Another Day. It's a huge advertising platform. And now that Bond won't be driving an Aston Martin -- AM will be sold by then -- chances are that Bond will be helming a Jaguar XF. Expect that announcement to be made just as soon as the sale of Aston Martin by Ford is inked.

Bloody disgraceful. Bond should be driving an Aston or a Bentley.

Bond has driven anything from a Citroën to a BMW to a tank to a Lotus...

So how about a nice cup of **** *** **** **?

[notthehamster]

'Jaguar made only 75,000 cars in 2006....the high point was 61,000 sales in 2002......Yet 2006 saw sales slump to a mere 21,000 units'
Eh?