Why Did Ford Sell Aston Martin?

It may be hard to believe, but at one point, Ford owned the upscale automotive brands Aston Martin, Land Rover, Jaguar, and Volvo. This was part of a late 1990s plan dubbed the Premier Automotive Group (PAG) to help the Blue Oval expand beyond its mainstream roots. Lincoln was also part of PAG for a brief period. Fast-forward to 2006, and Ford was in financial trouble, having lost over $12 billion that year, forcing the company to lay off 30,000 workers and look for ways to raise cash.

As part of its restructuring, Ford decided to disband PAG. The first premium brand to go was Aston Martin, which was sold in 2007 for $925 million. Ford initially bought a controlling interest in the British automaker in 1987 and took over entirely later.

Despite its heritage with iconic vehicles like James Bond's DB5, Aston Martin never benefited Ford strategically. In 2006, Aston Martin did about $658 million in global revenue. In comparison, Ford's worldwide business added to over $160 billion that year. In addition, Aston Martin vehicles didn't share any engineering technologies with Ford models, making the handoff to new owners less complicated. The Aston Martin sale was an integral part of "The Way Forward," a plan launched by Ford's then CEO Alan Mulally to streamline the automaker's operations and improve profitability.

Free from Aston Martin, Ford could focus on its core Ford and Lincoln brands while looking for buyers for the other PAG marques. Mulally's restructuring enabled Ford to reshape its product mix toward core products that offered the greatest profit, while accelerating the development of new models.

At the time, industry analysts pressed Ford to sell off money-losing Jaguar or Volvo as a first move. However, these brands were connected to the product pipeline. Ford's EUCD platform would underpin the Volvo S80 and the Land Rover Freelander, among others. Meanwhile, the Volvo S40 and V50 would have some overlap with the Ford Focus and Mazda Mazda3.

Eventually, Ford untangled the connections between the PAG brands and its core models. Jaguar and Land Rover were sold to India-based Tata Motors in 2008 for $2.3 billion. Ford let Volvo go last, selling it to China's Geely Holding Group for $1.8 billion. The closing of the Volvo deal marked the end of Premier Automotive Group, as Lincoln had returned to the official Ford fold years earlier.