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Ford to unload 2 luxury brands
Indian company set to buy Jaguar
BY MARK PHELAN • FREE PRESS AUTO CRITIC • March 5, 2008
GENEVA, Switzerland -- The global auto industry will get a major new player, and Ford Motor Co. will lose a major distraction when Indian conglomerate Tata buys Jaguar and Land Rover from Ford in a deal the automakers are likely to consummate in about two weeks.
The acquisition of two high-profile luxury brands will transform Tata, which prides itself on building affordable vehicles that are fuel efficient and easy to service.
It also will free Ford to devote its resources to repairing its North American operations.
The price of the deal has not been disclosed.
Awaiting the sale, Tata's top executives spoke Tuesday of their plans for the company -- which employs about 19,000 people in North America, including several hundred in metro Detroit -- and reveled in the acclaim for the European debut of their $2,500 Nano at the Geneva auto show.
The car's unveiling drew one of largest crowds of reporters and auto executives at the show.
"We did not expect this kind of international response" to the Nano, developed to be India's Model T -- the first car the average person could afford, Tata Motors Managing Director Ravi Kant said.
The company does not have current plans to sell the car in Europe or other developed markets, Tata Group Chairman Ratan Tata said, but "we are unbelievably surprised at the international attention for the Nano.
"We hope a high-end Nano one day will be available in Europe."
Tata, which sold 580,280 vehicles in its last fiscal year, is preparing for a growth spurt fueled by the Nano and other new models. It's looking for a boost at home and to expand in developing markets, Kant said.
Good move for Ford
The Jaguar acquisition is seen as chancy for Tata and good for Ford.
"Now Ford can concentrate on fixing the big problems at the Ford brand," said Joe Phillippi, principal of AutoTrends Consulting in Short Hills, N.J. Ford decided to sell Jaguar and Land Rover last year to focus its money and resources on repairing its North American operations. After fielding several offers, it began detailed negotiations with Tata late in 2007.
New ownership does not guarantee success for the long-troubled brands.
"Jaguar-Land Rover is a risky purchase no matter who buys it," said Michelle Krebs, editor of AutoObserver.com. "How do you reverse the downward trend? How does a company with no expertise in marketing global luxury brands take on that job?"
No announcement of the Ford-Tata deal will be made during the Geneva auto show this week, but "no major roadblocks" stand in the way, Lewis Booth, executive vice president of Ford's European unit, said Tuesday in Geneva.
"Indian businesses are now being more active and aggressive internationally," said Shanat Patel, global emerging markets strategist for Nomura Research in London. "This is just the beginning. Other Indian companies will become a global presence."
Tata Motors is part of the Tata Group, which had worldwide revenues of $28.8 billion in its last fiscal year and accounts for 3.2% of India's gross domestic product. Tata is already a major global force in steelmaking, information technology services and engineering services.
Tata does business in 80 countries and has 289,500 employees worldwide.
"Tata Motors is a success in India," Patel said. "Now we must see if it can succeed globally. They have a competitive business, and they believe it can benefit from buying two global brands and managing them better."
Struggling brands
Jaguar has consistently lost money and struggled to compete with luxury-car leaders, such as BMW, Lexus and Mercedes, since Ford acquired it in 1990. Land Rover has made some money since Ford bought it from BMW in 2000.
"I don't know about the prospects" for the brands under Tata, said Gaetan Toulemonde, Deutsche Bank's Paris-based auto analyst.
"The track record is bad. Nobody's been able to make Jaguar-Land Rover profitable. Ford has struggled with Jaguar. Land Rover's been with BMW, Ford and Honda. Nothing has worked yet," Toulemonde said.
"I'm a little lost in the logic of the deal," he added. "Can a company that's built its reputation on cheap cars succeed in the luxury market?"
Long-term deals to get components and engineering input from Ford will be vital to the brands' prospects, Krebs said.
"It's crucial Tata and Ford have ongoing contracts so they're joined at the hip for five to 10 years," Phillippi said. "Then one has to assume Tata engineers will gain the knowledge to do it themselves."
Indian company set to buy Jaguar
BY MARK PHELAN • FREE PRESS AUTO CRITIC • March 5, 2008
GENEVA, Switzerland -- The global auto industry will get a major new player, and Ford Motor Co. will lose a major distraction when Indian conglomerate Tata buys Jaguar and Land Rover from Ford in a deal the automakers are likely to consummate in about two weeks.
The acquisition of two high-profile luxury brands will transform Tata, which prides itself on building affordable vehicles that are fuel efficient and easy to service.
It also will free Ford to devote its resources to repairing its North American operations.
The price of the deal has not been disclosed.
Awaiting the sale, Tata's top executives spoke Tuesday of their plans for the company -- which employs about 19,000 people in North America, including several hundred in metro Detroit -- and reveled in the acclaim for the European debut of their $2,500 Nano at the Geneva auto show.
The car's unveiling drew one of largest crowds of reporters and auto executives at the show.
"We did not expect this kind of international response" to the Nano, developed to be India's Model T -- the first car the average person could afford, Tata Motors Managing Director Ravi Kant said.
The company does not have current plans to sell the car in Europe or other developed markets, Tata Group Chairman Ratan Tata said, but "we are unbelievably surprised at the international attention for the Nano.
"We hope a high-end Nano one day will be available in Europe."
Tata, which sold 580,280 vehicles in its last fiscal year, is preparing for a growth spurt fueled by the Nano and other new models. It's looking for a boost at home and to expand in developing markets, Kant said.
Good move for Ford
The Jaguar acquisition is seen as chancy for Tata and good for Ford.
"Now Ford can concentrate on fixing the big problems at the Ford brand," said Joe Phillippi, principal of AutoTrends Consulting in Short Hills, N.J. Ford decided to sell Jaguar and Land Rover last year to focus its money and resources on repairing its North American operations. After fielding several offers, it began detailed negotiations with Tata late in 2007.
New ownership does not guarantee success for the long-troubled brands.
"Jaguar-Land Rover is a risky purchase no matter who buys it," said Michelle Krebs, editor of AutoObserver.com. "How do you reverse the downward trend? How does a company with no expertise in marketing global luxury brands take on that job?"
No announcement of the Ford-Tata deal will be made during the Geneva auto show this week, but "no major roadblocks" stand in the way, Lewis Booth, executive vice president of Ford's European unit, said Tuesday in Geneva.
"Indian businesses are now being more active and aggressive internationally," said Shanat Patel, global emerging markets strategist for Nomura Research in London. "This is just the beginning. Other Indian companies will become a global presence."
Tata Motors is part of the Tata Group, which had worldwide revenues of $28.8 billion in its last fiscal year and accounts for 3.2% of India's gross domestic product. Tata is already a major global force in steelmaking, information technology services and engineering services.
Tata does business in 80 countries and has 289,500 employees worldwide.
"Tata Motors is a success in India," Patel said. "Now we must see if it can succeed globally. They have a competitive business, and they believe it can benefit from buying two global brands and managing them better."
Struggling brands
Jaguar has consistently lost money and struggled to compete with luxury-car leaders, such as BMW, Lexus and Mercedes, since Ford acquired it in 1990. Land Rover has made some money since Ford bought it from BMW in 2000.
"I don't know about the prospects" for the brands under Tata, said Gaetan Toulemonde, Deutsche Bank's Paris-based auto analyst.
"The track record is bad. Nobody's been able to make Jaguar-Land Rover profitable. Ford has struggled with Jaguar. Land Rover's been with BMW, Ford and Honda. Nothing has worked yet," Toulemonde said.
"I'm a little lost in the logic of the deal," he added. "Can a company that's built its reputation on cheap cars succeed in the luxury market?"
Long-term deals to get components and engineering input from Ford will be vital to the brands' prospects, Krebs said.
"It's crucial Tata and Ford have ongoing contracts so they're joined at the hip for five to 10 years," Phillippi said. "Then one has to assume Tata engineers will gain the knowledge to do it themselves."
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