Ford props up Jaguar with another £1.2bn

Ford props up Jaguar with another £1.2bn

	Published : Sat, 24 Dec 2005 18:35 By : Cedric Benson Print this Story

LONDON: Struggling car-maker Jaguar yesterday said it had received £1.2 billion as additional capital from its parent US-based Ford Motor Co.

The recapitalising is intended to fund the restructuring of the brand which has been facing tough trading conditions. Twice in the past two years, Ford has had to prop up its luxury car-making subsidiary as declining sales pushed it deeper into the red. Last year, it made a pre-tax loss of £429.3 million including an asset impairment charge of £173 million. In 2003 it had suffered a bigger loss of £601 million.

About half the number of cars it makes are sold in the US but during the last year, vehicles like Range Rover had been overtaking the sales of Jaguar’s cars. From January to November Jaguar sales in the US had declined 15.5 percent to 43,458 units. Sales in Europe had similarly dipped with new car registrations down 23.1 percent at 43,045 units.

High exchange rates had also added to the pressure created by declining sales. The declines forced the company to scale back production at its Coventry plant and cut 1,150 jobs in England. Ford is now believed be considering the sale of the 77 year-old Coventry plant which has been the home of the Jaguar brand.

The company had hoped to reverse the downtrend by the third quarter this year and predicted it might break even in 2007. However, in September the company chose not to repeat the forecast implying that trading conditions had continued to be tough.

The recapitalising was carried out by issuing preference shares to Ford Motor Co.

Parent group Ford, which is the US’ second largest car maker, has been facing difficulties of its own back home. Mounting losses have forced the car maker to shut down operations in North America with the resultant job cuts. It had also to abandon the US daily car rental business.

Ford had bought the UK based luxury car maker in 1989 for £1.6 billion.