U.S.A.:Upscale Fords hit mark
Aston Martin, Jag, Rover, Volvo add $164 million to coffers
By Eric Mayne / The Detroit News
Ford Motor Co.’s Premier Automotive Group — the automaker’s collection of European luxury brands — may finally be paying off.
The upscale nameplates — Aston Martin, Jaguar, Land Rover and Volvo — contributed $164 million in pretax profits to Ford’s coffers in 2003, beating a previous benchmark set in 2000, even though at that time PAG included the Lincoln brand.
Ford has never disclosed the group’s 2000 earnings, but says they were “modest.” It began breaking out PAG results in the first half of 2003. In 2002, the unit lost $740 million.
“That high-water mark (in 2003) will be exceeded this year,” Don Leclair, Ford’s chief financial officer, said Thursday. “We expect this to become a regular habit.”
Leclair reiterated that Ford expects the PAG to earn between $500 million to $600 million this year. In 2003, the group’s revenues climbed to $24.9 billion from $21.3 billion, even though worldwide unit sales fell to 752,000 from 771,000.
As part of Ford’s five-year revitalization plan, now entering its third year, the automaker is counting on PAG to provide 30 percent of its profits by mid-decade. That amounts to about $2.3 billion because Ford’s pretax profit goal for mid-decade is $7 billion.
Ford’s PAG strategy, devised by former CEO and President Jacques Nasser, has been criticized by some analysts as too expensive. But Leclair noted the group’s 2003’s earnings represent a $900 million turnaround.
“This time last year, we were reporting a loss,” he said. “We said we’d get it fixed and we have. That’s a credit to management here and at PAG. It’s basically an improvement at all brands.”
Mark Fields, chairman and CEO of PAG, remains unfazed by the lofty goals set for the brands. In addition to expanding product offerings, Fields has shepherded an intense waste-elimination initiative that contributed to Ford’s $3.2 billion reduction in operating costs last year.
PAG has uncovered savings in areas such as manufacturing and material costs.
“We did a study on door handles,” Fields said in an interview. “This one was pretty eye-opening. We had about six or seven competitors’ door handles, including our own. We realized very quickly, going through that analysis, we were paying significantly more for our door handles.
“In ’04, we will continue to attack those areas and make progress in those areas,“ Fields said.
My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.
My next Ford.....