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.