Ford opened up a new era in automotive history Thursday by announcing it hoped to sell the company's Jaguar and Land Rover brands to India's Tata Motors.
Ford had announced last year it planned to sell both Jaguar and Land Rover in a bid to raise more cash to sustain its core business in both North America and Europe while the company goes through a difficult and lengthy restructuring.
"Ford is committed to focused negotiations at a more detailed level with Tata Motors concerning the potential sale of the combined Jaguar Land Rover business," Ford said in a statement that has been expected since before the Christmas holidays.
"There is still a considerable amount of work to do, and while no final decision has been made, we will proceed with further substantive discussions with Tata Motors over the forthcoming weeks with a view to securing an agreement that is in the best interests of all parties concerned," said Lewis Booth, executive vice president - Ford of Europe and Premier Automotive Group Chairman.
The announcement of the planned sale to Tata also amounts to the end of the line for the Premier Automotive Group, which Ford launched with high hopes in the late 1990s.
Desperate to raise cash, Ford sold Aston Martin, James Bond's favorite brand, to a group of private investors last year for nearly $1 billion. Ford also considered selling Volvo, PAG's fourth pillar, but Ford Chairman Alan Mulally pulled it off the market last year after deciding the Swedish company's engineering skills were too critical to the company.
Tata appears to have become the the preferred buyer by default. The global credit crunch has meant that private equity groups have had much more difficulty raising capital since last summer and Ford's management and board of directors did not want to take a chance on the deal failing to close.
Tata Motors is part of a large family-run Indian conglomerate with ample financial reserves thanks to the unfolding economic boom in South Asia. In addition, any deal with Tata will undoubtedly lead to a long-term alliance that should prove beneficial to Ford as the Indian economy continues to grow. India itself is considered one of the automobile industry's premier growth areas in the decades to come.
Tata's bid also had the blessing of British unions, which like organized labor in the rest of Europe and the Americas, remain deeply suspicious of private equity groups, which operate on short timelines and have a history of huge paydays for small groups of top executives.
Meanwhile, the sale of Jaguar and Land Rover, which passed into Ford's hand as Great Britain privatized the last pieces of its motor vehicle industry, marks a historical turning point for the automotive business.
A Chinese automaker acquired the assets of MG Rover more than two years ago but Ford's sale to Tata will make the Indian carmaker into a global brand.
Tata is an extremely ambitious company; only last month it mounted an impressive display, featuring ten different vehicles, at the Bologna Motor Show in Italy to illustrate the breadth of its recent development.
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