Ford to Spend More on Models for Remaining Brands (Update3)
Ford to Spend More on Models for Remaining Brands (Update3)
By Bill Koenig
Jan. 25 (Bloomberg) — Ford Motor Co., the world;s third-
largest automaker, will spread its product-development budget
across fewer models this year as it sheds European-based luxury
brands, Chief Financial Officer Don Leclair said.
Selling U.K.-based Jaguar and Land Rover will mean “we;re
spending more;; on the remaining brands, Leclair said yesterday
in an interview after Ford estimated its 2008 capital budget at
about $6 billion, the same as last year. That includes money for
creating and redesigning new cars and trucks.
Ford, working to return to profit in 2009 after $15.3
billion in losses over two years, is focusing on the money-
losing North American auto unit and unwinding a strategy begun
in 1987 to boost earnings by acquiring European luxury brands.
“If you want any chance to stabilize your market share,
you;ve got to have new models,;; said Erich Merkle, an auto
analyst at consulting firm IRN Inc. in Grand Rapids, Michigan.
“That;s your lifeblood. You;ve got to give people product
that;s new.;;
Ford hasn;t posted a market-share gain in the U.S. since
1995, when it accounted for one in every four vehicles sold.
Including Jaguar and Land Rover, Dearborn, Michigan-based Ford
captured 15.8 percent of the U.S. market in 2007.
Ford rose 32 cents, or 5.1 percent, to $6.58 at 4 p.m. in
New York Stock Exchange composite trading.
Mulally;s Strategy
Chief Executive Officer Alan Mulally wants Ford to build
more models the company can sell worldwide. Ford is developing a
subcompact car that will be sold in Europe and Asia later this
year and in North America in 2010.
Leclair said that strategy will enable Ford to reduce
vehicle-development costs. The company probably will maintain
capital spending levels while “getting more new product;; for
its investment, he said.
Ford borrowed $23.4 billion in late 2006 to finance new
models while paying for buyouts, early retirements and plant
closings.
“We;re going to continue to invest in the new product,
especially the small and medium-sized cars and utilities that
people really do want,;; Mulally told Bloomberg Television
yesterday.
Ford sold U.K.-based Aston Martin last year, and India;s
Tata Motors Ltd. is in talks to buy Jaguar and Land Rover.
Leclair declined to comment in detail about discussions
with Tata. “We really think we;re making a lot of progress,;;
he said. “We don;t see a lot of sticking points.;;
To contact the reporter on this story:
Bill Koenig in Southfield, Michigan at
