Jaguar and Land Rover: It's Tata to Ford!

[TonyVianoAmbiente]

Or rather, Ford to Tata.

According to the Financial Times, Ford will tomorrow announce the sale of Jaguar and Land Rover to Tata of India. Here's the FT article:

LINK HERE

 

[jamesmc]

How sad is that

 

[Mr E]

The really sad thing is how Ford managed to screw the thing up in the first place - the whole PAG strategy was wrong and when the guy put in place to run said so, they fired him.

Ford's plan was that AM, Jaguar. LR, Volvo would save them from financial disaster by trading on the brand - underinvest in development, build down to a price and fleece those remaining loyal to the brand traditions. Whatthey failed to spot was that the market had moved on in expectation (they are US-based after all...) and that they were buying into product sets that were at the bottom of development curves.

We'll see if Tata have the money to sink into these brands - I doubt it. They're raising $3 billion in debt issue (what timing, eh?), 2 of which goes to Ford. OK, Ford look after the pension fund for a few years, but only $1billion left for R&D across both brands if you're optimistic.

Tata was really the only hope for these brands - no-one else was going to buy them outside of a Rover-type deal which would never happen 'cos Ford need the money. They could do good things for the brands if they let them get on with what they are good at, but I fear that won't happen and you'll get backlash from the market as the brand image dilutes. LR will survive as it makes sense for Tata and fits in with what they do - Jag will probably fall into a rebadged decline...

 

[Bobby Dazzler]

Budget might not be too bad if both brands focus on core segments. Therefore if they choose to develop a new segment, then don't introduce a new generation of another model, and make sure the new one will be more profitable.

 

[glojo]

I hate to say this but my thoughts are we are saying goodbye to vehicles that were once at the very leading edge of brand image, but that is not going to be the case when and if these marques leave our shores.

John

 

[Mr E]

Budget might not be too bad if both brands focus on core segments. Therefore if they choose to develop a new segment, then don't introduce a new generation of another model, and make sure the new one will be more profitable.

Problem is, $1 billion does buy a lot of R&D in automotive anymore unless you go for slow, iterative-type development which is usually the domain of more niche manufacturers (e.g. Aston Martin). Tata has little expertise in this area, and there will be a reduction in platform/component sharing as time goes by. There is an interesting little tie-up with Fiat that could come into play at some point, but much would depend on the details of the deal with Ford and whether there is any IP lock-down period.

The industry view is that Jag/LR needs about $5billion, and Volvo the same, in order to revitalise and turn over the ranges.

 

[Vlad]

In the circumstances I think its a positive outcome as Ford are suffering financially badly in the US and do not have the money to sink into Jaguar and Land Rover or have lost the will to do so due to their ongoing problems in the US, whereas Tata have a growing global brand who have had huge success from their other acquisitions....British Steel/Corus being a classic example!!

Have to say that from a timing aspect Ford have got it all wrong as Land Rover is going great guns at the moment and Jaguar should start reaping some rewards due to a new line up of models....but then again I don't think Ford had much choice and that their hands were somewhat tied.

Will be interesting to see how this takeover develops in the coming years....I think Tata will do well out of it and if thats the case then you can only hope that that will secure jobs or increase jobs here in the UK.

 

[jeremytaylor]

I fear that Mr E's assessment is correct. Under-investment will continue the further decline of the brands, which means less confidence and less interest from buyers, less sales, less money to invest. And so on ...

It has long been said that the number of car manufacturing groups will fall, and this is, I think, part of that process.

 

[TonyVianoAmbiente]

I hate to say this but my thoughts are we are saying goodbye to vehicles that were once at the very leading edge of brand image, but that is not going to be the case when and if these marques leave our shores.

I have to agree. But the rot won't start with the Tata takeover. The rot already started with Ford.

And as for brand image, the dreadful XF that looks like a Ford Mondeo coupe spells the end of the brand image that Jaguar once had.

I wonder if one of Tata's first actions will be to re-start imports of their Tata Indica (a.k.a. CityRover) under a new "CityJaguar" brand?

TATA INDICA

 

[big x]

Land Rover was one of the best performing auto makers in 07.
European sales up 11.1% to 100,000 and one of the few companies to make a profit.
Given that they buy in engines it seems to me they are in a good position regardless of ownership. For example they could once again be free to source BMW engines for Range Rover.

adam

 

[glojo]

Land Rover was one of the best performing auto makers in 07.

That is good news. I feared they were on a slippery slope especially after loosing the huge military contracts. Apart from the UK, what countries are buying Landrovers?


Regards
John

 

[prprandall51]

My thoughts: Tata won't spell the end of Jaguar and Land Rover, the last budget will take that honour. Most of the vehicles produced by these two manufacturers fall into Gordon's "hate" tax on higher output vehicles. Regardless of any other factor, domestic sales of these two marques is sure to decline rapidly because they are bought by people who have an eye on costs.

Philip

 

[DaveK]

Well I hope they build cars better than they run call centers.
Lets see how Brown handles the massive unemployment when production is moved to India.

 

[gary350]

Its a big big player

The Tata Group is one of India's oldest, largest and most respected business conglomerates. The Group's businesses are spread over seven business sectors. It comprises 98 companies and operates in six continents. It employs some 2,89,500 people and collectively has a shareholder base of over 2.9 million and market capitalisation of $56.52 billion as on March 19, 2008.

gary

 

[gary350]

And as for brand image, the dreadful XF that looks like a Ford Mondeo coupe spells the end of the brand image that Jaguar once had.


TATA INDICA

XF look like a mondeo should have gone to spec savers.

gary

 

[Mr E]

Its a big big player

The Tata Group is one of India's oldest, largest and most respected business conglomerates. The Group's businesses are spread over seven business sectors. It comprises 98 companies and operates in six continents. It employs some 2,89,500 people and collectively has a shareholder base of over 2.9 million and market capitalisation of $56.52 billion as on March 19, 2008.

gary

It may be a "big player" but is small fry in the automotive world. It has very limited R&D resource - not $s but skilled and experienced persons. It has limited consumer marketing experience in the main auto markets either.

Tata are indeed very good at business, but the success comes not through innovation but through cost saving, and that has a limited lifespan. This is the major problem - the companies who have the financial clout to buy these ailing companies do not have a strong innovation or development background in this market. Landrover is successful on the back of it's tapping into the demand for big-statement SUVs (that they may be good off road or not is neither here no there for 95% of the market) and that requires consumer knowledge. Jag bleeds money because it has singularly failed to read it's consumer market.

Both brands are tied into powertrain deals for the next 5-10 years. That will stunt development. Those who care for their career will move elsewhere, so the experienced talent base will go as well. Whether they admit it or not, companies like Tata and SAIC do not have the heavyweight skills to develop these brands. Those skills lie predominantly in Europe (and to some extent in the US) and it's difficult to see them migrating east any time soon (it's not happened in the last 40 years to any great degree).

The more I think this through, the more I come to the conclusion that Tata have made a big mistake for everyone.

 

[grober]

New name

I heard that the new jaguar model is to be renamed from

JAGUAR XF to TATA WTF or at least that's what several new owners were overheard saying.