Cat May be Ready to Pounce

If Volkswagen AG is fattening up its product portfolio to take on Mercedes-Benz and BMW AG, why shouldn't Jaguar? The British automaker's recent announcement it would build a new small car - its DEW98-based X200 - in the U.K. is just a piece of a bigger plan to battle the German luxury car heavyweights. Last summer, Ford Motor Co. Automotive Operations President Jacques Nasser told Jag Chairman Nicholas Scheele to start with a clean sheet of paper and formulate a plan that would give Jaguar everything it needs to be competitive. Long term, Mr. Nasser sees Jaguar matching the Germans - almost but not quite - model for model. "To ape Mercedes-Benz and BMW would be wrong," says Mr. Scheele. "Jaguar has to come up with its own appropriate strategy. We don't want our appetite to overcome our ability, but we have to ask, 'What else?'" Mr. Nasser says it doesn't take a genius to know what Jag needs. And that, surely, means a small sports car, a coupe or two, possibly a wagon and perhaps even the once-rejected sport/utility, as well as three tiers of mainstream sedans. In addition to the X200, Jag plans a BMW 3 series-fighting entry-level model, the X400, which could be based on the all-wheel-drive version of Ford's Mondeo platform. By 2003 Jaguar hopes to sell 250,000 cars a year. That's a long way from Mercedes' target of 1 million cars annually, but a healthy rise from Jaguar's current sales volume of 45,000.

A Rolls is a Rolls is a Rolls?

Would a Rolls by any other name drive as sweet? Those bidding for Rolls-Royce Motor Cars are pondering that question right now. It seems the rights to the Rolls-Royce name are held by Rolls-Royce plc, the independent aerospace operations spun off from the carmaker in 1973. It licenses the carmaker to use the name and doesn't have to extend those rights to any foreign buyer. That appears to leave BMW AG in the catbird seat. It has an airplane engine joint venture with Rolls-Royce plc and is favored by the aerospace company in the bidding war that includes Volkswagen AG, Toyota Motor Corp., other automakers and some independent investors. Among the independents is the Rolls-Royce Action Group., a collection of about 10 Rolls-Royce enthusiasts in the U.K. It is appealing to Rolls-Royce and Bentley owners as well as banks in an effort to raise $1.1 billion to keep the automaker in British hands. Another interested party is the Sultan of Brunei, whom a BMW insider says could make a good partner with BMW in a Rolls-Royce venture.

Bust Time in Brazil?

It appears to be edging closer to bust than boom again in Brazil, a market that still is trying to shake its reputation for volatility. With more than $15 billion in new car-making capacity planned between now and 2000, analysts were predicting the Brazilian automotive market was about to bust out. But it now appears Brazil - at least short-term - won't be able to escape the domino effect of the economic crisis plaguing Southeast Asia. Interest rates have doubled in the past month, and Brazilian automakers have had to take actions lately to counter the resulting drop in new-car demand. Fiat SpA had to stop production for at least 10 days in late January due to a 31.5% plunge in December sales. And Volkswagen AG got unions there to agree to staff reductions and pay cuts expected to save $179 million. General Motors Corp. cut production 25% in November. Honda Motor Co. Ltd. says it is holding off opening a new $300 million 170,000-unit-per-year motorcycle plant because it wants to be "more cautious" about its investments, given the global economy.

Storm on India's Horizon

India's San Engineering and Locomotive Co. is set to enter the automotive market with a small sports coupe dubbed Storm that is scheduled to go on sale in October. A prototype of the front-drive vehicle was unveiled at the New Delhi auto show in January. The San Storm is the first sports coupe to be made in India and the first designed and developed in Europe exclusively for the Indian market. The car reportedly will be equipped with a Renault 1.1L engine. The Storm's world debut comes just as Honda Motor Co. Ltd. launches production of its City car at a greenfield plant in Noida. Capacity is for 30,000 cars, but Honda has set a first-year sales target of 15,000 sedans. Equipped with either a 1.3L or 1.5L engine, the City competes in the premium price segment.