A couple of weeks ago I talked about Ford selling Volvo to BMW [issue 179]. There were some plusses for BMW and it appeared that there weren't any real advantages for Ford. Now we're hearing that Ford is preparing to sell Jaguar and Land Rover to anyone who has the money. The question here is why. Yes, Jaguar is losing money like crazy, but Land Rover is profitable.

Why sell them together? The reason is that while they don't share a single platform, they do share engines and almost all the factories where both are made. Having closed the brand's original Brown's Lane, Coventry assembly operation last year, Jaguar still has sites at Coventry, Castle Bromwich and Halewood on Merseyside. Land Rover shares the Jaguar plant at Halewood and has its main plant at Solihull in as well as development facilities at Gaydon in the West Midlands. Also it may seem to Ford that the only way they can get rid of Jaguar is to include Land Rover.

Ford has confirmed that they have contracted with Morgan Stanley and Goldman Sachs to arrange the sale. I'm sure they will make a lot of money on this sale themselves. This would be pretty much the end of Ford's PAG -- Premier Automotive Group. Aston Martin is gone, and only Volvo would remain with the departure of Jaguar and Land Rover.

I think this would be a blow to Ford considering that GM is trying to build Cadillac into their "premier" marque worldwide. They aren't having much success in Europe, however. In Britain, Lamborghini outsold Cadillac in the first five months of this year. And they outsold Cadillac by a factor of two! Jaguar is losing money, predicted at $550 million this year and $300 million next year. But unlike the image of Cadillac outside the U.S., Jaguar has an excellent image of British elegance. Why, then, is Jaguar losing money?

It is product, not image. Well, maybe it is kind of both. Jaguar does have the image of British luxury, but the products these days appear that they should be driven by a wealthy British man in his seventies. That does not go well here in the U.S. Cars need to reflect youth, even if they are being bought by rich older people. The new Jaguars look like they were built in 1980 -- or before. The XJ sedan and the S-type sedan were styled to look like the cars they built in the last century -- mid last century.

Ford has a real problem with this concept. Their management seems to think that if they build cars that look like cars that people liked from the past, they will sell. Maybe that works for the Mustang, but it certainly is not working for Jaguar.

Ford also suffers from the "introduction lag" problem that seems to infect all of the Detroit manufacturers. A prototype is shown, and various teasers are shown from time to time until years later the real car shows up. By then the actual car is a tepid version of the prototype and buyers are tired of all the PR plus the real thing isn't nearly as great as they expected. Ford should have learned form the experience with the Thunderbird. Apparently the lesson didn't take. Jaguar is doing the same thing with the S-type replacement. A stunning concept (inside and out) is shown at several auto shows. Journalists and photographers are allowed to drive the concept on closed downtown Los Angeles streets (yes, limited to 20 miles per hour). Camouflaged versions of the real production car are seen testing by spy photographers. And… the spy photographers have done too good a job! Photos of the interior show that the real car is very far indeed from the concept. The concept car's interior really looked like a 21st century car. The real car's interior looks like it belongs in a production car of 1980. Ford has done it again. Maybe this is why they need to unload Jaguar quickly.

Apparently they do want to make the sale quickly because the Detroit News reports that the internal name of the sale is "Project Swift".

Understandably the British are very scared that the sale of Jaguar and Land Rover would mean job cuts. Jaguar has 10,000 employees and Land Rover a further 9000 today. Jaguar shed some 1100 jobs in 2004. The closure (or sale to China) of MG Rover caused the instant job loss of 6000 in central England in 2005. A year later Peugeot Citroen shut a British factory that employed 2300 people. Nissan and the Chinese automaker who bought MG Rover are hiring, but in limited numbers. Prime Minister Tony Blair stated that Jaguar and Land Rover have a bright future regardless to whom they are sold. "We still believe that both Land Rover and Jaguar are highly successful companies and will have a highly successful future."

Okay, what would Ford gain by the sale? As was pointed out in the discussion of the sale of Volvo to BMW, Ford wouldn't get much cash, if any. Ford has already mortgaged all the assets of these companies to raise cash. So the sale of the assets would go to pay off the loan, not into spending money.

The BBC maintains that Ford is selling Jaguar and Land Rover so that they can focus on rebuilding the Ford brand worldwide following the loss of more than $12 billion in 2006.

"Ford have got some huge problems on their own, really huge," says former Jaguar chief executive Geoffrey Robinson, now a member of parliament, who insists that Ford is facing a battle for survival.

Aaron Bragman, auto analyst at Global Insight, says that the "time-frame in which they have to start getting exciting vehicles on the road in order to start returning Ford to profitability is alarmingly short".

To make it happen, "Ford needs to get rid of the luxury brand distraction", adds Christian Boettcher, partner with automotive strategy firm Lansdowne Consulting.

So the BBC's analysis based on these experts is that the sale isn't about raising cash, but that they wouldn't distract management any longer and also wouldn't contribute to losses. Note, however, that Land Rover makes a profit, though together, they probably contribute a loss to Ford.

In the U.S., Jaguar's sales have gone from 60,000 in 2002 to about 20,000 in 2006, which is a considerable loss, but Land Rover sales have increased in the same period. Mr. Boettcher points out the problem with the X-type was that it was based on the Ford Mondeo. He said that it was too obvious. "People in the U.S. were not fooled." Oh yeah? I wonder just how many people in the U.S. even know what a Mondeo is -- even Jaguar buyers. I'd say that it failed in the U.S. just because it was not a competitive product regardless of what platform it came from.

Mr. Boettcher also points out that Ford doesn't need Land Rover because Ford already has a wide range of SUVs in the Ford brand lineup. I guess he doesn't recognize that the Land Rover nameplate sure has a different appeal than the Ford nameplate even if the vehicles have the same off-road capabilities. Drive along coast highway in Malibu. You see Land Rovers (actually Range Rovers) in the driveways, not Ford Explorers. And off-road capabilites? I doubt that any of those ever see the mud off-road.

The problem is that by selling both Jaguar and Land Rover, Ford will have zero presence in the luxury market worldwide. Lincoln? Oh come now! This is a very profitable segment of the vehicle market, and one I would think Ford would be foolish to abandon. The British consultants don't think so. They feel that Ford should focus on doing what they supposedly know best -- building and selling mass-market cars, pickups, and SUVs. But then they also think that Ford should sell Volvo as well.

Who would buy Jaguar and Land Rover. The British feel that it will probably go to an equity firm like Magna who lost Chrysler. They point out that Fiat, Renault, and Peugeot have stated they aren't interested. They don't point out that a company like Hyundai would be a perfect fit for the luxury brands. Maybe the Koreans would have too much pride to buy the British marques, but it would give them instant credibility in the high-end vehicle market. They also don't have anything like Land Rover in their plans for the near future.

What is the hidden agenda for the sale that nobody in any of the articles I've read has mentioned? The European Union is considering drastic cuts in carbon dioxide emissions for vehicles. Those emissions are already taxed in England. If big cuts are put into regulations, the luxury marques will be hit the hardest. Economy cars already have low CO2 emissions because they usually have low-powered small engines. How about an S-class Mercedes with a little 4-cylinder engine? This is what the proposed standards seem to indicate will happen. The EU proposed voluntary standards starting now to phase in by 2015. Only Fiat among the European manufacturers has reached the voluntary standards. The luxury manufacturers are very concerned that the EU will make "voluntary" into "mandatory" because they aren't reaching their current goals. That means that by getting rid of Jaguar and Land Rover, Ford will have a much easier path to lower CO2 emission standards. This may be a big reason for the sale.