Ford Selling Jaguar And Land Rover

Ford, who once had purchased Land Rover and Jaguar a few years ago for $5.3 billion is on the way to selling these names to an Indian company named Tata, for $2.3 billion. Tata is a very large and diversified Indian company that is known for manufacturing heavy trucks and some small inexpensive cars. Tata is the first Indian company to be acknowledged and recognized in the auto industry here in the U.S.

When the sale is complete, Tata will continue to manufacture in the U.K. By Ford selling Land Rover and Jaguar to Tata, it will free up some much needed cash, but $600 million of that cash must be put into the Jaguar-Land Rover pension fund according to the terms of the sale. That would leave Ford with $1.7 billion to use to dig themselves out of the quicksand of recession.

Even though Ford is selling Land Rover and Jaguar to Tata, it will still supply engines, transmissions, engineering and environmental support and other components to the company. The Tata group will have its hands full, and especially with Jaguar. Ford put $10 billion into Jaguar after they bought it for $2.5 billion. The luxury brand has lost market share due to the Japanese, who are producing luxury vehicles that out perform the British icon.

The Tata group will allow Jaguar to operate their own business with minimal interference from them. They want Jaguar to re-establish itself as a premium British Car Company that can re-invent itself in the twenty-first century. Land Rover on the other hand, has increased its market share in the U.S. since Ford purchased it in 1999 for $2.8 billion from BMW. It will be interesting to see what happens to Land Rover now that the SUV market is on its decline, but Tata will also allow Land Rover the freedom to plan its own course.

Tata reported earnings of $420 million in fiscal 2007 from its 98 operating companies which are involved in engineering, telecommunications, chemicals and power generation. Tata has become no stranger to the auto industry; it just announced that they are building a $2500 car that will replace the motor scooter that is used in developing countries around the world. This vehicle would be able to carry a family instead of just one or two people.

Ford selling Jaguar and Land Rover is no surprise. Tata has the resources to make it work, if the consumer agrees. The surprise isn't over yet.

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