Ford has injected another $2.1 billion (€1.7 billion) into Jaguar Cars to cover heavy losses and investment writedowns at its British luxury car subsidiary, the company said on Friday.
The move marks the second time within two years that Ford has had to recapitalise Jaguar, which has battled weak sales.
"The money is correct as a recapitalisation," Jaguar spokesman Don Hume said, confirming press reports. "It takes the form of preference shares issued to Ford Motor Co. If nothing else it underlines, despite recent rumors, Ford's ongoing commitment to Jaguar," Hume added, but would not comment on whether more such operations might be needed.
Jaguar's unconsolidated British operations had a pretax loss of £430 million (€630 million) in 2004, including an asset impairment charge of £173 million pounds (€253 million). That narrowed its 2003 loss of £601.1 million (€876 million), including an impairment charge of £534 million (€782 million).
Ford does not break out separate profit statements for Jaguar, and in September declined to repeat its earlier forecast that it would break even by 2007.
The move by Ford to prop up Jaguar is no surprise given the expensive restructuring the brand is working through, but it poses another headache for Ford managers grappling with problems on the home front. Ford is set to announce sweeping job cuts and plant closures in North America next month, to address mounting losses on its car business there.
Ford bought Jaguar in 1989 for £1.6 billion pounds, or about €2.4 billion, but has struggled to make money with the brand, part of its Premier Automotive Group. PAG also includes Volvo, Land Rover and Aston Martin.
PAG had a third-quarter 2005 pretax loss of €91 million.
PAG and Ford of Europe head Lewis Booth told Reuters this month that Jaguar was not for sale despite market talk of this.
Under pressure to curtail losses at Jaguar, Ford last year cut 1,150 Jaguar jobs in England, scaled back production at the Browns Lane plant in Coventry and shifted output to another factory near Birmingham.
Now Ford is considering the sale of its historic Browns Lane plant that was the home of its iconic Jaguar brand since 1928.
Acknowledging that it was building too many cars, Jaguar last year lopped 15,000 units of planned output to help shore up pricing power in an increasingly competitive premium car market. It also pulled out of the US daily rental business this year as it adjusted production volume to meet demand.
Jaguar sales in the key US market fell 34.4 per cent in the first 11 months of this year to 42,458 units, while new car registrations of Jaguars in Europe fell 23.1 per cent to 43,045 cars.
- Reuters