Ford cuts its losses

Ford Motor wants to get shot of two much maligned boutique brands just as they threaten to turn profitable.

The automaker, which wants to sell Jaguar and Land Rover by the end of this year, will whittle bidders down to a shortlist in the coming weeks. It is weighing up offers from Tata Motors and at least four private equity groups -- Cerberus Capital Management, TPG, Terra Firma, and One Equity Partners -- for the luxury brands.

Any sale will not be made without some kicking and screaming. Squeezing money from the two brands has always been a problem, but Land Rover, which Ford bought in 2000, has just turned profitable. Jaguar, which was bought in 1990 and has incurred billions of dollars in losses for the Detroit automaker, is also selling briskly again. However, Ford desperately needs the cash. Internal wrangles within Ford's executive ranks over the brands' future look likely to complicate the sale process over the coming weeks.

The two brands are probably worth about $1.5 billion combined and will be sold as a pair. It also makes strategic sense for the pair to end up with an established automaker for reasons of economies of scale, so Tata Motors could be a natural home. Ford stands to make a huge loss: it paid $5.5 billion for Jaguar and Land Rover and probably spent a similar amount ploughing money into the brands.

Read more from The World Next Week