- Summary: Ford's Premier Automotive Group ("PAG") - its portfolio of European nameplates (Aston Martin, Jaguar, Land Rover and Volvo) has not lived up to expectations. Despite hopes that PAG would account for almost one third of its operating profit, PAG lost $1.6 billion in 2005 and is not expected to be profitable this year. Yesterday, Ford announced that it is considering selling PAG's crown jewel, Aston Martin. Analysts expect Aston Martin to fetch anywhere from $200 million to over $1 billion. Ford's next decision will be what to do with other PAG nameplates, most noticeably Jaguar and Land Rover. Ford needs the cash for a restructuring of its struggling North America operations.
- Comment on related stocks/ETFs: Aside from Ford's problems being well documented, it remains to be seen if they can build cars that resonate with the American public. High gas prices have contributed to a 12.3% decline in its bread and butter pickup truck business, and their (once extremely profitable) SUVs are feeling the heat as well. One area to watch: Will the slump in new SUV sales trickle down to the used car market? If that happens, SUVs coming off leases will be worth significantly less than the residual amounts originally written into the leases. This will cause further losses for Ford's (and other automakers) financing arm.
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