Ford sells off Aston Martin for $ 632 million

BY A CORRESPONDENT

March 15, 2007: As Ford Motor Co sealed a deal to dispose of Aston Martin for $632 million, the auto major is seen as losing a very important part of its luxury car business. With the deal now on, questions are being asked whether the embattled Detroit-based carmaker would shed any of the remaining three branches too. However Ford has said that Jaguar and Land Rover will not be put up for sale.

According to a report, the auto major had five years ago forecast that Ford’s Premier Automotive Group, which comprises Volvo, Jaguar, Land Rover and Aston Martin, would contribute at least a third of its profits by the middle of the decade. And as if endorsing this view, Aston Martin has flourished during its two decades under Ford's ownership. Now with Ford disposing of the company, industry watchers say that it is admitting that Aston Martin was a failure. It may be noted here that the Premier Automotive Group had posted losses of $327 million last year

Meanwhile, rating agency Standard & Poor's has said that the Aston Martin sale would not affect Ford's B-minus credit rating. However, it was also pointed out that one would never minimise the benefits of having more cash, given what they expect to burn through. Ford has so far put relatively few assets up for sale. Besides Aston Martin, it raised $5.6bn in 2005 from the sale of Hertz, the car-hire operator.

With the Detroit-based car maker sealing the Aston sale deal, experts say that Ford would operate profitably at lower volumes and changed model mix, and speed up development of new products.