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Hitt og þetta 1. september 2006

DJ THE SKEPTIC: Ford Takes Wrong Turn With Aston Martin


By Howard Wheeldon
A DOW JONES NEWSWIRES COLUMN

LONDON (Dow Jones)--If by putting Aston Martin up for sale, Ford is abandoning plans to sell Jaguar, then the Dearborn-based automaker is making the wrong decision.

Aston Martin may be easy to sell because it has fewer links to the rest of the Ford empire than Jaguar or Land Rover, which share parts with Ford's other brands.

Raising as much as $1 billion from flogging Aston Martin must look tempting from an accounting standpoint too.

But against that, Ford should remember that Aston Martin is the one premium brand that is stronger than it was at the start of Ford's tenure - 12 years in this case.

What's more, no matter what Ford does to turn Jaguar round, it would take years before the damage done to the brand over the past twenty odd years can be repaired.

Jaguar needs more cash - oodles of it, promising a drain on Ford for at least the next ten years.

Of course, Ford might make exactly that commitment. After all, Aston Martin produced fantastic looking cars for a long time, but it had been a financial wreck for the best part of twenty years before Ford bought it in 1994.

But Ford hasn't come close to pulling off the same trick at Jaguar.

It's now seventeen years since Ford acquired the unit. Jaguar should have been turning out around 150,000 cars a year but the reality is the carmaker is struggling to sell even 100,000.

Though the two brands are hardly comparable, as Aston Martin is virtually handmade, it would be better for Ford's image to stick with Aston Martin and let someone else rebuild Jaguar.

All investors can hope is that Ford's management is just testing the waters, putting Aston Martin up for sale first before it risks putting Jaguar and Land Rover up for auction.

As to who might buy Aston Martin, that's anyone's guess, though workers will hope that current management, private equity, or another rich entrepreneur in the mold of David Brown, emerges. It was Brown who turned Aston Martin into a brand fit for James Bond to drive.

Though ruling out another European or even Japanese carmaker as a potential buyer at this stage would be foolhardy, it does seem unlikely that in these difficult times for the auto industry that a volume carmaker would pay a king's ransom for Aston Martin even with Lagonda and Tickford brands thrown in.

You never know, though. It's only eight years since Volkswagen paid an exorbitant GBP430 million for Rolls Royce Motors even though it ended up getting only the Crewe based factory and Bentley brand name. So Ford might get a keen price for Aston Martin.

The company does have intrinsic value, a great name, modern production facilities at Gaydon making 5,000 cars a year compared with 40 it used to. But Aston Martin is a company with a specialist niche product, not a global luxury-car maker.

For Ford's long-suffering shareholders, the worry is that even if management does manage to screw up to $1 billion from a willing buyer, it won't take long to squander the proceeds if Ford holds on to Jaguar.

(Howard Wheeldon was a senior equities analyst for 20 years, and has been a columnist at Dow Jones for the past four years. He can be reached at +44 207-842-9251 or by e-mail: howard.wheeldon@dowjones.com)

(END) Dow Jones Newswires

September 01, 2006 06:26 ET (10:26 GMT)

Copyright (c) 2006 Dow Jones & Company, Inc.

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