New profits slump puts Jaguar up for grabs

DAILY EXPRESS, By David Benson

Jaguar, the company that produces the world's sleekest, sexiest cars, was hit by another cash crisis yesterday.

And the Big Cats that that the glamour pusses love to pose with now look certain to be hunted down by "toy boy" rivals in a takeover battle. As the British firm's profits stumped from £22.5 million to £1.4 million, Germany's Volkswagen joined the queue of predators walling to move in. The dramatic fall in profits, announced in London by chairman Sir John Egan, was the worst since Jaguar was hived off from British Leyland as a private concern. Jaguar's reputation as a car builder has never been better and sales around the world — with the exception of the United States — have never been higher. But the company cannot generate enough cash to fund the kind of research and development programme needed to sustain its quality image.

"The problem with Jaguar," according to one observer at this week's Frankfurt Motor Show in West Germany. ' Is that it is in the futures business not the car business,"

There are three main contenders waiting for the Government's Golden Share in the company — designed to ward off hostile bids — expires at the end of next year. Cash-rich Ford has a secret task force called 'Columbus 2 ' devoted to planning a takeover bid in the near future. And General Motors has said that Ford would get Jaguar 'over our dead body". Both companies want the car to provide a serious contender to Mercedes Benz and BMW in European and American markets. But it emerged in Frankfurt that a bid is now being put together by Volkswagen.

The German firm is neck and neck with Fiat as the largest manufacturer in Europe. But desperately needs an executive car to rival BMW and Mercedes on its home market. VWs own Audi is a fine car but cannot match the charisma of its rivals. The Audi has also suffered a sales slump in the U.S. Now VW officials see the opportunity of gaining a bigger slice of the luxury car market by buying Jaguar.