Today’s Jaguars are built on Ford platforms, use Ford engines, Ford electrics, switchgear and transmissions.
Aston Martins were built the same way, but then they’d have a couple of guys in Newport Pagnell hand build the bodyshell. Jaguar didn’t do that, which is why the XK8 and V8 Vantage were priced completely differently even though they were 98% identical. The Connolly leather and Wilton carpets bit was pretty much all that differentiated a 1998 Jaguar from a hypothetical 1998 Lincoln convertible.
Jaguar benefited from economies of scale just as Toyota does; it wasn’t like they had to build their own GPS units or somesuch, because Ford did it for them.
Specifically its the amount of money that is borrowed, purely to pay the exorbitant price asked for the company, that always struck me as absolutely bonkers. e.g.:
1 - Company A is successful, and has little or no debt (possibly not exactly the case in Jaguar/Landrover, but the subsequent points still apply).
2 - Company B wants to buy Company A, but the asking price is outrageously high
3 - Company B borrows money to pay for Company A (typically far more than Company A is actually worth by any sane valuation of their business, revenue, assets etc.)
4 - Company B buys Company A (sometimes in a hostile takeover)
5 - Company A is exactly the same company as it was in at point 1, same business, same product lines same revenue, same assets. Nothing has been created or built, except the letterheads now say “Company A, part of the Company B family”, but now (as Company B’s debts are now Company A’s debts) it has gone from being in black (or at least there abouts) to owing more money than than they could possibly hope to pay back, given their revenue streams.
This happen loads in the pre-credit-crunch days (including a case where I worked for “Company B” at the time, unfortunately not “Company A” as those *&#!ers end up minted ) and always struck me as unsustainable voodoo econmics of the worst kind.
So Tata borrows $2 billion to buy Jaguar. Assuming the bankers are charging, say 6%, this means that Tata is on the hook for $120 million/yaer (interest only). If Jaguar’s sales are about 70,000 vehicles/year, and ASP (to the dealers is $50,000 each), then their income is perhaps 3.5$billion. If they manage 5% gross margin on that is$175 million. Seems like a paltry profit.
Umm the events of the last few months have pretty much born out that view. You’ll notice when the Tata deal, which is by no means amoung the most erroneous examples of this, went sour and they were unable to service their loans post-credit crunch they were forced to cap-in-hand to the UK taxpayer for a handout) .
Though I would not use the term “fucking idiots” (or even #$%@ing idiots), they were incredibly clever people who brought into the dominant paradigm that incurring huge debts is ok, and assumed that because credit was cheap and easily available now, it would remain so in the future.
As ** Really Not All That Bright** pointed out they don’t make profit, so thats not the case. But thats not really my point. My point was that nothing has changed in “Company A”, their revenue (and margin) remains the same, the only thing that has changed is their company letterhead and the fact that now you have 100’s of millions of dollars of interest payments to make each month. How can that be good thing for “Company A” ?
I think you are mistaking the fact that Jaguar developed the AJ-V8 engine which is a superb engine. The AJ-V8 was used in some Lincolns and Thunderbirds but is not a “Ford” engine. It was developed before Ford bought Jaguar.
Some “snobs” complain that the new Jaguars are using an engine that was developed over 10 years ago. That may be the case but the engine is proven and is superior to many performance engines developed after it.
) and always struck me as unsustainable voodoo econmics of the worst kind.