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Jaguar Finds World A Luxury-Car Jungle


THE Jaguar car, long a symbol of British automotive excellence, is under threat from foreign predators. An international auction to acquire it is likely. The road for Jaguar began getting bumpy when Sir John Egan, the company's chairman, announced a trading loss for the first half of 1989. A week later Sir John was shocked to learn that Ford Motor Company wanted a piece of the company and that it apparently hoped to gain a controlling interest in it a year or two from now.

Jaguar faces a twin problem. It is a small company, making about 50,000 cars a year, and therefore it lacks the resources that larger manufacturers can muster for research, development, and promotion.

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Also, it exports 75 percent of its production, including 40 percent to the United States. A weakening US dollar has slashed its profits in North America. Severe competition from West Germany's BMW and the threat from Toyota's new Lexus luxury model have been squeezing its share of the market.

The result is a much-weakened company, vulnerable to foreign takeover.

For a while Jaguar may be able to resist being swallowed by Ford or other companies bidding for it.

Four years ago when the Jaguar company was privatized (it had been part of the lossmaking state-owned Austin-Rover Group) Prime Minister Margaret Thatcher insisted that the government should retain a ``golden share.'' This means that until the end of 1990 the government has power to prevent a foreign takeover of Jaguar and to limit foreign holdings in it to 15 percent.

After the golden share lapses, however, nothing may be able to stop Jaguar from being eaten by other beasts in the car jungle.

Sir John hopes currency trends may come to the rescue of Jaguar and that with product-range improvements his company will begin trading at a profit again.

Privately, however, Jaguar executives concede that the company is in a weak position to stage a convincing recovery.

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International pressure is on all carmakers to build new cleaner engines and to upgrade the performance of cars at the luxury end of the market. Without an injection of foreign capital and expertise, Jaguar is poorly placed to compete with companies such as Porsche.

Sir John says: ``Our desire has always been to maintain the independence of the company, but Jaguar is ready to discuss collaboration with other companies.''

Among European companies that have expressed an interest in gaining a stake in Jaguar are Volvo of Sweden, Peugeot of France, and Volkswagen of West Germany. Lindsey Halstead, chairman of Ford of Europe, says: ``There are benefits for Jaguar and ourselves in laying the foundation for a long-term association.''

If Ford's stake is increased beyond 15 percent ``at some time in the future,'' Mr. Halstead says, his company will maintain Jaguar as a separate entity. But he is offering no guarantees that Ford will be willing to limit itself to a minority stake.

Ford already owns Aston Martin, a prestige British sports car. Jaguar's weak position creates the likelihood that an international auction will develop to acquire it.

The British government has not said what it would do if such an auction developed. The Labour opposition has said Mrs. Thatcher should do everything possible to resist a foreign takeover of Jaguar, including an extension of the golden share and an injection of public money.

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