Ford, world’s third largest auto maker, has agreed to sell Jaguar and Land Rover to the Indian auto-company, Tata. The deal has been finalized over $2.3 billion. This is less than half the price by which Ford bought the two brands. The economic recession and job losses affected the sales of luxury vehicles which forced Ford to sell these two brands.
On the other hand, this acquisition has become a major landmark of Tata’s international growth. Bloomberg.com reports:
Ford is ending its investment in U.K.-based brands as the U.S. housing slump and job losses curb sales of models such as the $80,000 Jaguar XK. Ford is working to return to profit next year after $15.3 billion in losses in 2006 and 2007.
``Ford's financial situation is so severe it simply can't afford to sustain the two companies any longer,'' said Peter Schmidt, managing director of U.K. consulting firm Automotive Industry Data. ``Jaguar has been nothing but a financial millstone.''
Ford acquired Jaguar in 1989 for $2.5 billion and Land Rover in 2000 for $2.73 billion as part of a European-luxury strategy it began by buying Aston Martin in 1987. It sold Aston last year.
The Jaguar-Land Rover sale should be completed at the end of the second quarter, pending regulatory approvals, Ford and Tata said.
Tata will pay $2.3 billion while Ford will pay $600 million to cover the pensions and wages of the employees. Though Ford is selling the two brands, it will provide Tata with the engines, metal stampings, necessary auto-parts and engineering support.
Indian government is very happy with this acquisition. Kamal Nath, India’s Commerce and Industry Minister, congratulated Tata Group. According to him, through this deal Tata group has held the Indian private sector flag high. He said that domestic Indian firms have demonstrated to the world business their progress and mentality for growth.
Last year, Tata steel bought Corus Group PLC, another British still company. This year, it took over two other major British auto-brands. Britain ruled India for about two hundred years. Now, India is an independent country enjoying high economic growth. The table has really turned for India. Now, the billion dollar question is – Will Tata be able to turn around Jaguar and Land Rover into a profitable company?
Related article:
Bloomberg
Times of India
I love car. And i also love long drice with a precious car. However, Land Rover is my most choosen car. If i can then i should buy a Land Rover and travel from one country to another country. I am happy that Indian based car company Tata bought the these two famous brand. May be they will try to sell cheapest Land Rover or Ford. I am waiting for this time
Posted by: kamrul hasan | March 27, 2008 2:20 AM | Permalink to Comment