Jaguar looks for £500m cash injection |
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Published
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Mon, 28 Mar 2005 01:00
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Cash-strapped Jaguar is in talks with its US parent company Ford, for a £500 million bail-out as the company expects to announce another year of losses in what has been a tough year in the competitive car industry.
This is the second time in just a gap of one year that the British luxury car brand is talking about bail-out after it received a £260 million cash injection from Ford. But despite cash boost, Jaguar made it clear that the company at no cost would be able to breakeven before 2007.
| Jaguar, which was bought by Ford in 1989 for £860 million, has blamed poor sales, weakening of the dollar, and heavy spending on product development for company’s losses which calculates to hundreds of millions of pounds the last year.
But industry experts believe that company’s losses are due to Jaguar’s ageing designs, it was slow on catching diesel engine trend, which is popular in Europe more than petrol. In addition, the group’s cars have failed to impress Americans – which accounts for about half of the company’s annual sales - against what was expected, with weakening of the dollar adding to the woe.
Jaguar losses amounted to £601 million in the year 2003, which included a £533 million write-down in the value of its assets. Though 2004 figures are yet to be filed, sources at Jaguar said the company will require a similar size of cash injection to the asset charge in 2003.
In September, Jaguar had announced that it was pulling shutters at its Browns Lane plant in Coventry, which would leave 1,150 jobless. The company had said it was left with no choice but to close down the unit as the capacity exceeded demand, despite UK car market was showing signs of recovery.
According to the figures released by the Society of Motor Manufacturers and Traders (SMMT) earlier this year, the sales of new Jaguar cars bounced back 11 per cent to 32,535 in 2004.
But despite UK sales looking bright, Jaguar said it has no plans to hike sales to 200,000 a year from the present level of 120,000 and 130,000.
Unlike its rivals, the company does not have manufacturing unit in the US which would help balance out exchange rate fluctuations, though it had planned one but later backed out due to unhealthy option.
Meanwhile, its parent company, Ford’s Premier Automotive Group, which includes Volvo, Aston Martin and Land Rover as well as Jaguar under it umbrella, reported a pre-tax loss of $740 million in 2004, against a pre-tax profit of $171 million in 2003. However, Ford’s PAG has said that it will notch a pre-tax profit of $300 million to $600 million in 2005.
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