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Ford Says “Tata” to Jaguar, Land Rover Page 2


To mangle a popular song lyric, the future looked so bright, one needed sunglasses. According to Mark Fields, now Ford’s President of the Americas, but then head of the PAG, the luxury arm would provide a third or more of Ford’s global earnings, by 2006. It fell far short of the goal, and few insiders expected things to get much better. And so, when Allan Mulally, the former Boeing executive, was named Ford Motor Co. CEO, late in 2006, he began thinking twice about the PAG strategy.

Mulally quickly put Aston on the block, and early last year, a group of Kuwaiti investors snapped up the resurgent supercar brand for $925 million.

Desperate for money, even after mortgaging most of Ford’s assets, Mulally decided to pare back the PAG even further, and announced that Jaguar and Land Rover would also be auctioned off – in this case, as a pair, since they had largely integrated their operations, anyway. The announcement drew a slew of bidders, confident they could do a better job than Ford had. Among those eyeing the two British brands was none other than former Ford CEO Jacques Nasser, but by late 2007, Ford made it clear that it had all but settled on Tata as the buyer of choice.

In recent weeks, details of the negotiations had been kept unexpectedly close-to-vest, leading many inside the two British brands to worry about their future. But it’s significant to note that a sizable number of Jaguar and Land Rover executives, former Ford employees, were making it clear that whatever happened, they intended to stay with the British marques – or retire – rather than return to the U.S. company’s fold. “I have no interest at all in going back,” said a senior product executive, asking not to be identified by name. “I’m confident things will get a lot better once we’re out from under Ford,” added another, top-level Jaguar executive.

What happens next is anything but certain, however.

On the Ford side, the PAG has effectively ceased to exist, except as a pseudonym for Volvo. There had been talk, inside Ford, of selling the Swedish brand, as well, but particularly in today’s market, it’s considered highly unlikely there’d be a buyer willing to pay anywhere near the original $6.5 billion. And so, in some ways, the Jaguar/Land Rover deal is good news. It’s likely to mean more resources and, according to Volvo CEO Frederik Arp, his company will work even more closely and directly with Ford, going forward.

As for Jaguar and Land Rover, there’s an unavoidable irony to the idea that two jewels of the British automotive empire are now the property of an Indian manufacturer. But times have changed since the days of the Raj. While poverty and economic inequality are crippling problems, India’s middle class is growing exponentially, and like those in that other fast-emerging market, China, they are hungry for mobility.

Tata is anxious to feed that hunger. Already the subcontinent’s largest automotive manufacturer, it recently introduced the Nano, a stripped-down car for the masses, which will go for a modest $2500. Ratan Tata, the self-made billionaire owner of the Tata Group, has made it clear he’s not going to be happy just focusing on basic transportation. With Jaguar and Land Rover, he’s hoping to gain a level of instant credibility among the automotive world’s leading players. And, in a brief interview at the Geneva Motor Show, earlier this month, Tata hinted that the acquisition will help set in pay another key goal: getting the Tata brand into the tough but still-critical U.S. “It’s important,” he emphasized, “because it’s the world’s largest market.” With the potential size of India’s auto buying public, never mind China, one might question that statement, though it’s certainly true for now, and on the luxury side, the U.S. will almost certainly dominate for decades to come.


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Comments (8)
  1. Jag and Rover in the deep doo-doo of the third-world mess. This is sad and regrettable to hear. Too very bad for all. :(
     
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  2. This is going to be interesting. I don't know what will happen to the Land Rover and Jaguar brands in the US. Will curried Range Rovers fly? Rich people don't seem to like it when people buy their way in. How is Tata going to keep the 'Qwicky Mart' image away from these marque brands? I guess the good news is that quality can't really go down at Land Rover.

    If they bring the Defender 110 to the US, that would be really interesting to me.
     
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  3. $2.3 billion,... That would make Jaguar and Land Rover the world's most expensive pair of Tatas in history ... ;-)
     
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  4. Proof positive that a history of colonialism will come back to bite you. Twice.
     
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  5. From what I have read, it seems like Tata is planning on keeping its new golden jewels on their current path. And in some ways they will be better then they were under Ford. Here's hoping anyway!!!
     
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  6. IMO Mr TATA is trying to chew too much at the same time and he might choke, some at Ford wanted to keep the brands but at the moment Ford doesnt have the money that Jag needs for future projects.

    For those who think Ford messed with this brands they are very wrong, back when Ford bought jag the brand was a real mess, the quality was a joke and the factories looked worse than a 3 world country plant,but they automated the plants and putted Jag quality on the top, and it took time to get Jag on a plan and make them stick with it . the design of the S type mondeo based that was other bad desicion they made. Ford invested in Jag heavily and gave the cat a life line of another 19 years because I bet that if Ford havent bought Jag in 89 I bet the cat would be dead.

    The think Ford needed to address long ago was in the styling department, if the XK and XF had been designed and the cars had been in the market by 04 this sale wouldnt be happening but its deal done so lets hope the kitty and LR can survive
     
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  7. Ford poured billions into Jaguar and made it initially far more reliable than it used to, but it still could not compete with the BMWs and M-BS of the world.

    OF course, FOrd made very Stupid mistakes in managing Jaguar, esp. the excremental Ford Contour rebadged as the so-called X-type Jag. The stupid car was not good even as a FORD, it had less rear room than even the much smaller ESCORT! I rented one once because I had to, for a couple days, what a loser!

    Land ROver is the WORST, by far, in reliability, worse than even Kia, Hyundai, Chrysler, Dodge, every single other brand.

    And the Range ROver is RIDICULOUSLY Overpriced.

    I have no idea what the hell Tata can do about this, or why they bought the brands. Maybe as "halo cars"?

    I suspect it will be a dismal failure for them too, as it was for Ford.
     
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  8. Tatas believe in clean dealings and have a great corporate philosophy. Additionally, they have capable management who can turnaround ailing companies and make them profitable. With TCS to support, which supplies automobile software to the likes of Ferrari, Jaguar will be able to source the best automobile software. Indians have expertise in cutting costs without compromising on the quality. Tatas can certainly incorporate these advantages to their benefits and make superior quality cars at a comparatively cheaper price. In the final analysis, all these factors will benefit the UK automobile industry and the UK public at large.
     
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