India's Tata Buys Jaguar, Land Rover
Updated from 10:01 a.m. EDT
Ready or not, Jaguar dealers in the U.S. and around the world will now be selling an India-owned auto brand.
Ford
(F) - Get Report
, in a long-expected move, announced Tuesday that it sold luxury auto brands Jaguar and Land Rover to India's Tata Group in a roughly $2.3 billion deal.
The deal ends a long sale process for the U.K.-based brands, which have been on the block for nearly a year as part of Ford's ongoing restructuring process.
Tata Group has long been speculated as a likely buyer for Jaguar and Land Rover. Aside from Tata Motors, the company's massive network of businesses includes the India's largest software company, a prestigious line of hotels and a network of steel businesses like the U.K.-based Corus Group, one of the world's leading aluminum and steel companies.
Jaguar Could Maul Tata Motors |
var config = new Array(); config<BRACKET>"videoId"</BRACKET> = 1474198123; config<BRACKET>"playerTag"</BRACKET> = "TSCM Embedded Video Player"; config<BRACKET>"autoStart"</BRACKET> = false; config<BRACKET>"preloadBackColor"</BRACKET> = "#FFFFFF"; config<BRACKET>"useOverlayMenu"</BRACKET> = "false"; config<BRACKET>"width"</BRACKET> = 265; config<BRACKET>"height"</BRACKET> = 255; config<BRACKET>"playerId"</BRACKET> = 1243645856; createExperience(config, 8); |
While Tata is one of India's most venerated family-owned businesses, its prospect as a likely buyer of Ford's brands
last December, when a representative for U.S. Jaguar dealers expressed skepticism about how Indian ownership would affect a prestigious British auto brand like Jaguar.
"I don't believe the U.S. public is ready for ownership out of India of a luxury car make," Ken Gorin, chairman of the Jaguar Business Operations Council, told
The Wall Street Journal
last year. "And I believe it would severely throw a tremendous cast of doubt over the viability of the brand."
Those comments came at a time when U.S.-based assets are increasingly being scooped up by overseas investors flush with cash from booming economies like China, India and the Middle East. The trend has exacerbated widespread angst in the U.S. about the effects of global trade on labor markets.
Gorin's comments inflamed resentments in India, a nation that struggled for independence from the British Empire and is now exploding with economic growth and an emerging middle-class.
Gorin could not be reached for comment through his publicist. Ford spokesman Tom Hoyt says Gorin's comments were misguided, and he called the controversy they sparked a "red herring."
"It's not a concern at all," says Hoyt. "The majority of Jaguar customers are concerned only about the excellence of the product and the services that are offered by a company -- not the ownership."
Tata Chairman Ratan Tata said his company will seek to build on the heritage of Jaguar and Land Rover and preserve their identities.
"We aim to support their growth, while holding true to our principles of allowing the management and employees to bring their experience and expertise to bear on the growth of the business," Tata said in a statement.
Roger Maddison, an official with Unite, Jaguar and Land Rover's main labor union, expressed support for the deal.
"Unite has secured written guarantees for all five UK plants on staffing levels, employee terms and conditions, including pensions, and sourcing agreements," Maddison said in a statement. "The sale ensures our members futures and we look forward to working with Tata."
Ford is selling off luxury brands from its Premier Auto Group in order to raise cash for its monumental restructuring efforts underway in North America, where the company has lost market share to foreign-based auto manufacturers like
Toyota
(TM) - Get Report
and
Honda
(HMC) - Get Report
. Ford's U.S. counterparts,
General Motors
(GM) - Get Report
and
Chrysler
are also struggling to reverse declining sales and profit weakness.
Ford sold Aston Martin, another brand from its luxury division, in March for $848 million. The only remaining brand in its luxury stable is Volvo, which company has said it will not sell.
David Cole, chairman with the Center for Automotive Research, says investors should view Ford's decision to hold onto Volvo as a promising sign that the company's restructuring efforts are making progress.
Cole dismissed the idea that Tata's ownership of Jaguar and Land Rover will be damaging to either brand. He noted that Ford's acquisition of Jaguar in 1989 for $2.5 billion was controversial in the U.K. at the time, and while Ford fared poorly on its investment, the brand itself has flourished. Ford acquired Land Rover for $2.75 billion in 2000.
"Anytime there's a change in anything in connection with the United Kingdom -- a culture that is firmly ensconced in tradition -- there's going to be a reaction, but this is not going to be a big deal," says Cole. "Ultimately, execution is the key thing."
Ford is expected to remain closely connected with Jaguar and Land Rover. Its credit arm will provide financing for dealers and customers of the two brands for a year. In addition, Ford will contribute about $600 million of the proceeds into the pensions at Jaguar and Land Rover.
"Jaguar and Land Rover are terrific brands," Ford CEO Alan Mulally said in a statement. "We are confident that they are leaving our fold with the products, plan and team to continue to thrive under Tata's stewardship."








