Ford Motor's decision to leave open the option of selling Jaguar and Land Rover separately may help the US carmaker attract buyers for the two luxury brands.
They share management, procurement and some other functions but have sharply different product portfolios and financial situations. And while Land Rover is understood to be profitable, Jaguar has been losing money for Ford for years.
"They have seriously considered whether to sell them separately or not," a person familiar with the sale said. "All options are open."
However, Ford still hopes to find a single buyer for both.
The company on Tuesday sought to contain a growing backlash in the UK against the news that it had appointed advisers for the two brands' possible sale.
In a memo to staff, Geoff Polites, Jaguar and Land Rover's chief executive, urged employees not to "feel unsettled" by the question marks that had arisen over the two brands' future.
"I'd ask you to ignore the speculation and concentrate on what we have to deliver in our business in 2007," Mr Polites told staff on Tuesday. This should not "divert our attention from the tasks at hand".
Ford on Tuesday confirmed that it was "actively investigating its options" for the two marques.
"We are working with our financial advisors to determine the best future for Jaguar and Land Rover," a spokesman said.
The news that Ford might sell either or both brands puzzled some observers, and surprised many of its luxury brands' roughly 16,000 UK employees. While Jaguar continues to struggle with a revamp of its car portfolio, Land Rover has been chalking up record sales.
Eric McDonald, a senior organiser with the Unite union in Birmingham, said workers had been "very surprised" by news of the possible sale. "Senior managers were telling us they were not for sale," he says.
Relations between unions and Ford have historically been tense. Production at Land Rover's Lode Lane plant in Solihull was halted by strikes over pay in 2004; later that year, workers agreed to change working practices after Ford threatened to withhold investment.
As recently as March, Lewis Booth, who heads Ford's Premier Automotive Group, said that the two brands were "not for sale." People close to the company said Ford's decision to unload the two brands was motivated primarily by the desire of Alan Mulally, chief executive, to fashion a more streamlined mass-market business.
Ford lost $12.7bn last year and executives have said that they expect to burn more cash as they seek to restore the company's lossmaking US operations to profitability by 2009. "I think there's a new management in the US who want to focus on the Blue Oval, and these overseas brands are an unnecessary distraction," says a person close to the company.Land Rover and Jaguar sell only about 250,000- 300,000 vehicles between them and may be a distraction from Ford's larger turnround effort.
"It's about return on investment and whether you would be better off deploying management resources elsewhere," says one Ford official.
Analysts said there were few obvious industry buyers for the marques among established companies, although one of Asia's emerging carmakers might be interested.
Private equity investors are widely seen as likelier buyers following last month's $7.4bn sale of Chrysler to Cerberus. That sale and Ford's auction of its Aston Martin brand in March drew interest from several other buy-out groups, including Blackstone and Permira. A private equity buy-out would be viewed with deep suspicion in the West Midlands, home to most of the Jaguar and Land Rover plants.
The hostility of trade unions and the public contributed to the failure of a bid by buy-out group Alchemy for Rover Cars in 2000. Lord Bhattacharyya, the Labour peer and manufacturing expert, said on Tuesday that he strongly opposed any sale to private equity investors. "If Ford could not make Jaguar profitable, then how can private equity?" he says.
"We are opposed to private equity investors buying [Jaguar and Land Rover]," Mr McDonald, the trade unionist, says. "They close pension schemes, make people redundant and strip assets. We would resist that sort of buyer."