http://news.bbc.co.uk/2/hi/business/6741809.stm
A bit worrying about how this might end up...good like the Aston sale? Or another bad owner?
A bit worrying about how this might end up...good like the Aston sale? Or another bad owner?
Land Rover For Sale - Probably for real
- Thread starter dormobiledisco
- Start date
My initial impression would be negative...
First it will cerainly be bought by a private equity firm (PE) at a time when we are experiencing a PE M&A bubble. PEs are paying record prices for companies because banks are willing to underwrite most of the debt (80%+) and the PE can take control of the venture with very little cash on the table. The big auto makers are hemoraging money and they will certainly sell.
PEs are in the business of making financial deals, not making cars. With Land Rover being thouroughly intertwined with the Ford PAG supply chains for components, engines etc. it is much more likely that Land Rover will buy these itms from Ford or Jag than to reconstitute its ability to make its own engines and gearboxes.
Cost reduction will be the first line of business for the new PE owners. They will cut employees, outsource major tasks, close factories and sell off anything that is not deemed to be "mission critical".
Look for deep cuts in parts production and supply chain management, the number of dealer will likely be cut, warranty work will be reduced, support of the dealer network will diminish from current levels.
The PE will not want to invest in new tooling and expensive R&D so don't look for many new models if they are not already on the drawing board.
The PE will squeeze the nickle until the buffalo shits and then probably either sell the company on or break it up. There will be many girations before that point, look for the PE to announce that they are taking Land Rover private in order to better serve the public. Then they will do a new IPO once the PE bubble bursts but by that time every thing that can be listed as an asset will be leveraged to the hilt. The company will be so debt laiden that it will never have a chance.
The banks are underwriting these debts to get access to higher profits that the PEs are making, in some cases the bank will even take a piece of the equity. In the end the banks will end up owning the company. The PE guys will be long gone with 7 figure end of the year bonuses, the people that buy the stock will be out billions and the consumer will say..." I thought Land Rover made good products but this is crap".
First it will cerainly be bought by a private equity firm (PE) at a time when we are experiencing a PE M&A bubble. PEs are paying record prices for companies because banks are willing to underwrite most of the debt (80%+) and the PE can take control of the venture with very little cash on the table. The big auto makers are hemoraging money and they will certainly sell.
PEs are in the business of making financial deals, not making cars. With Land Rover being thouroughly intertwined with the Ford PAG supply chains for components, engines etc. it is much more likely that Land Rover will buy these itms from Ford or Jag than to reconstitute its ability to make its own engines and gearboxes.
Cost reduction will be the first line of business for the new PE owners. They will cut employees, outsource major tasks, close factories and sell off anything that is not deemed to be "mission critical".
Look for deep cuts in parts production and supply chain management, the number of dealer will likely be cut, warranty work will be reduced, support of the dealer network will diminish from current levels.
The PE will not want to invest in new tooling and expensive R&D so don't look for many new models if they are not already on the drawing board.
The PE will squeeze the nickle until the buffalo shits and then probably either sell the company on or break it up. There will be many girations before that point, look for the PE to announce that they are taking Land Rover private in order to better serve the public. Then they will do a new IPO once the PE bubble bursts but by that time every thing that can be listed as an asset will be leveraged to the hilt. The company will be so debt laiden that it will never have a chance.
The banks are underwriting these debts to get access to higher profits that the PEs are making, in some cases the bank will even take a piece of the equity. In the end the banks will end up owning the company. The PE guys will be long gone with 7 figure end of the year bonuses, the people that buy the stock will be out billions and the consumer will say..." I thought Land Rover made good products but this is crap".
Land Rover could make money over here, they just need the proper leadership and marketing, as well as the right product to sell.
The Defender could bring them profit over here, and a lot of it. The full line of Defenders.
That may sound crazy, but their marketing sucks. This vehicle is their halo model. It is the model they are remembered for, and the only one everyone knows.
That's the biggest mistake they ever made, not pushing the Defender adequately in the US market. The second biggest mistake they made was their marketing, something Jeep and Hummer have done very well with.
Now those vehicles have built in savings for the manufacturers, for obvious reasons. Land Rovers don't.
That was their third mistake.
So, they need to get models people actually recognise, market them effectively, and then go about sorting through their manufacturing process to build them with less expense.
An example? Hyundai. You can't turn on the television and avoid these Korean buggers. Hyundai is everywhere. They even take pot shots at luxury brands, like Land Rover.
Land Rover's problem is that it is a very poorly run company.
Cheers,
Kennith
The Defender could bring them profit over here, and a lot of it. The full line of Defenders.
That may sound crazy, but their marketing sucks. This vehicle is their halo model. It is the model they are remembered for, and the only one everyone knows.
That's the biggest mistake they ever made, not pushing the Defender adequately in the US market. The second biggest mistake they made was their marketing, something Jeep and Hummer have done very well with.
Now those vehicles have built in savings for the manufacturers, for obvious reasons. Land Rovers don't.
That was their third mistake.
So, they need to get models people actually recognise, market them effectively, and then go about sorting through their manufacturing process to build them with less expense.
An example? Hyundai. You can't turn on the television and avoid these Korean buggers. Hyundai is everywhere. They even take pot shots at luxury brands, like Land Rover.
Land Rover's problem is that it is a very poorly run company.
Cheers,
Kennith
ptschram
Well-known member
Jeep has no problem keeping the Rubicon and Unlimited dry in a rainstorm. They have no problem with airbags either.
If they can do it, Rover can as well.
It "Could" be the best thing that happens, most likely it will result in the same fate as MG/Rover.
If they can do it, Rover can as well.
It "Could" be the best thing that happens, most likely it will result in the same fate as MG/Rover.
The problem is who can afford to buy Land Rover today. It is much more likely that a PE will buy them than a consortium of offroad enthusiasts that know what the core of Land Rover really is.
Look at the Chrysler buy out by the PE firm Cererbus.
But....if we all put in $20k each maybe we can be the first enthusiast owned car company!
Look at the Chrysler buy out by the PE firm Cererbus.
But....if we all put in $20k each maybe we can be the first enthusiast owned car company!
Good analysis landrovered.
I saw this coming years ago. Ford has a cost structure problem and needs to focus on the core business. PAG is NOT core business. PAG ran upmarket when other manufacturers achieved parity. They didn't stand and fight. One can only run so far upmarket before you leave your core customers behind. Even in Britain Toyota is replacing the rural and farm vehicles as Land Rover talks about heritage. Talk only takes you so far before people want affordable products they can buy today, not tomorrow.
On top of this the regulatory environment for vehicles just became very unpredictable. The socialist see global warming as an opportunity to increase control and extract more fees and taxes. The US has spent itself into a $70 trillion dollar hole. The only way to gradually adjust to the debt is to deflate the dollar and understate inflation. The cost of manufactured goods outside the US will become very expensive unless that manufacturing is in a 3rd world country. Look for Land Rover manufacturing to move either to the US or 3rd world cost structure.
How the hell does Ford plan a product 5 years out? You can't. What do you do? Begin to reduce exposure to the unstable markets and look to invest in other areas.
I saw this coming years ago. Ford has a cost structure problem and needs to focus on the core business. PAG is NOT core business. PAG ran upmarket when other manufacturers achieved parity. They didn't stand and fight. One can only run so far upmarket before you leave your core customers behind. Even in Britain Toyota is replacing the rural and farm vehicles as Land Rover talks about heritage. Talk only takes you so far before people want affordable products they can buy today, not tomorrow.
On top of this the regulatory environment for vehicles just became very unpredictable. The socialist see global warming as an opportunity to increase control and extract more fees and taxes. The US has spent itself into a $70 trillion dollar hole. The only way to gradually adjust to the debt is to deflate the dollar and understate inflation. The cost of manufactured goods outside the US will become very expensive unless that manufacturing is in a 3rd world country. Look for Land Rover manufacturing to move either to the US or 3rd world cost structure.
How the hell does Ford plan a product 5 years out? You can't. What do you do? Begin to reduce exposure to the unstable markets and look to invest in other areas.
Fiat?
From the "That Was Yesterday" files: Jag, Land Rover, Volvo are on the block
Why did it fall through?
Ouch!
From the "That Was Yesterday" files: Jag, Land Rover, Volvo are on the block
Ford has been trying to sell Jaguar and Land Rover to Fiat ever since February. Ford has also retained Goldman Sachs and Morgan Stanley to help it sell all of the PAG brands, including Volvo.
The talks with Fiat -- held between Ford of Europe head Lewis Booth and Fiat CEO Sergio Marchionne -- fell through last month. . . .
The talks with Fiat -- held between Ford of Europe head Lewis Booth and Fiat CEO Sergio Marchionne -- fell through last month. . . .
Why did it fall through?
. . . Jaguar, however, has held things back: it has lost $500 million to $1 billion every year for the last six years, and Jag itself says it will be in the red this year and next. . . .
Ouch!
Like most of us, I agree with the observations about the Defender, about Jeep & Hummer taking over this market niche, and have ranted here many times on this issue... just stupidity on Ford's part.
I hope the sale goes down. Ford has squandered the brand and turned it'll soon be "just another luxury SUV"...
Is another company going to do a worse job? I doubt it. The Big-3's marketing dept's have always been shit compared to their European & Japanese competitors... and they've been beaten by their competition in creating brand loyalty and differentiation for decades. So the value is in the brand. Even if it's a PE firm, they are going to understand this.. certainly better than Ford's executive team apparently understands it (as it regards LR or Jag... I mean, you can only make money on a Ford Contour-based wanna be Jag for so long before consumers start getting wise...)
Bottom line: the market is making a determination that Ford is ill-equipped to run their business,, at least as it regards this niche.
More interestingly is what will happen on the efficiency and production side. I don't have the figures, but it must be FAR more expensive to produce vehicles in the UK than in many other places. The market has been vey hard on high-cost producers, and it's not going to get any easier. Will LR continue to be made in the UK? That's the question......... western governments and organized labor seem to be saying NO. You can fight the market all you want, but ultimately---the market will win. May sound cold to my friends in the UK.. but it is what it is.
Marketing is the great equalizer to that production/expense/revenue equation. Thus far, LR has failed to effectively market in the largest consumer market in the world to the extent that they have insufficiently differentiated themselves from their competition. Other high cost producers (in Germany, for example) have managed to compete quite well against their lower cost rivals. So we know it can be done... question is, does Ford have the vision to do it? Answer is obviously no. Let's hope the next owner, particularly if it's a PE firm, will see this and take positive advantage of it.
I hope the sale goes down. Ford has squandered the brand and turned it'll soon be "just another luxury SUV"...
Is another company going to do a worse job? I doubt it. The Big-3's marketing dept's have always been shit compared to their European & Japanese competitors... and they've been beaten by their competition in creating brand loyalty and differentiation for decades. So the value is in the brand. Even if it's a PE firm, they are going to understand this.. certainly better than Ford's executive team apparently understands it (as it regards LR or Jag... I mean, you can only make money on a Ford Contour-based wanna be Jag for so long before consumers start getting wise...)
Bottom line: the market is making a determination that Ford is ill-equipped to run their business,, at least as it regards this niche.
More interestingly is what will happen on the efficiency and production side. I don't have the figures, but it must be FAR more expensive to produce vehicles in the UK than in many other places. The market has been vey hard on high-cost producers, and it's not going to get any easier. Will LR continue to be made in the UK? That's the question......... western governments and organized labor seem to be saying NO. You can fight the market all you want, but ultimately---the market will win. May sound cold to my friends in the UK.. but it is what it is.
Marketing is the great equalizer to that production/expense/revenue equation. Thus far, LR has failed to effectively market in the largest consumer market in the world to the extent that they have insufficiently differentiated themselves from their competition. Other high cost producers (in Germany, for example) have managed to compete quite well against their lower cost rivals. So we know it can be done... question is, does Ford have the vision to do it? Answer is obviously no. Let's hope the next owner, particularly if it's a PE firm, will see this and take positive advantage of it.
I have a feeling that it would only be a couple of billion to buy Jag/Rover and maybe Volvo included. Look at Chrysler. It went for $7.4 Bln which is nothing, and it is a much larger company (sales, equipment, etc.) than Jag/Rover/Volvo.landrovered said:
landrovered said:
GOOD!
That would be the best thing that could happen to LR right now. If they would just keep selling the models that got them to where they are today (actually, where they were a decade ago) they may, actually, turn a profit. The latest round of Rovers are nothing but expencive, i.e. blingy - computer laden, i.e. un-reliable - showpieces. Guess what, the image shift did not work. They need to get back to the though as nails, go anywhere and back image that WE know and love.
Hey Land Rover, start marketing to REAL people and not RAPPERS!
ptschram
Well-known member
landrovered said:
I'm in and could probably find a coupla locals who'd put up a lot more-the same group that wanted to buy a franchise a coupla years ago.