Jaguar Lands On Its Feet Again
The British maker of speedy and stylish cars lives another life as Ford sells its luxury marque to an Indian company known for autos aimed at the middle class
Paul A. Eisenstein
From the Print Edition:
Kevin Costner, July/August 2008
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At least a half-dozen bidders materialized, including, curiously enough, groups led by several former Ford executives, Nasser among them. But by late last year, it was obvious that Tata was in the lead, and barring an unanticipated snag, a completed deal would only be a matter of time. When the announcement came, late in March, the Indian company had agreed to pay $2.3 billion—$200 million less than Ford had spent for Jaguar alone, nearly 19 years before. And a close look at the details revealed that the U.S. maker would take at least $600 million of the payout and use it to cover pension liabilities for Jaguar and Land Rover employees. "They basically gave it away," contends analyst Peterson.
"Jaguar and Land Rover are terrific brands [and] we are confident that they are leaving our fold with the products, plan and team to continue to thrive under Tata's stewardship," Mulally declared following the announcement. Perhaps not surprisingly, as they wait for the formal handover, officials with Jaguar and Land Rover have declined repeated requests for their own comments. On the record, anyway, but in private conversations, they express few reservations about the upcoming transfer of ownership. "I'm confident things will get a lot better once we're out from under Ford," a top-level Jaguar executive emphasized during a recent conversation. "I have no interest at all in going back," added a senior product executive, who, like his colleague, asked not to be identified by name. Indeed, surprisingly few employees who have the option of returning to Ford have so far asked for a transfer.
It seems likely that little will change from the consumer's point of view. Even when Jaguar and Land Rover were under their American parent, Ford preferred to emphasize their British heritage. And Tata probably won't choose a different path.
Though things are looking up for Jaguar and Land Rover, industry observers caution that Tata still has its work cut out, especially with the cat. But the automaker, and its massive parent, the Tata Group, have huge cash resources to draw on. Meanwhile, the deal lets Jaguar and Land Rover retain plenty of engineering and design resources, while Tata gains access to technology and talent it could only dream of before. That should help the Indian automaker improve and expand its more mainstream product lineup. And that's clearly something that Ratan Tata has in mind.
In a conversation just before the deal was final, the executive was visibly pleased to be expanding into new markets such as Europe, though he added that getting Tata into the critical United States "is important because it's the world's largest market." With the potential size of India's auto-buying public, one might question that strategy. But for now, and decades to come, the United States is expected to be a market you ignore at your own peril.
Whether Tata can finally push its new acquisitions over the hump and achieve its grand potential remains unclear. After all, Jaguar, in particular, has had a spotty record at best. But the cat has proven itself able to keep landing on its feet, and maybe this time, it will do more than just survive.
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