Although initially gripped by shock that two of England’s most prestigious and long established brands could be heading overseas to India, once things began to settle down, the picture changed dramatically as it became clear that this was going to be the first time in years that these two brands could actually have both financial stability and the opportunity to move forward.
OK they are classic names, but you don’t get much more classic or English than Rolls Royce and that’s owned by the Germans (but you would never know it). With Jaguar & Land Rover, the Indian conglomerate Tata also picks up the Daimler & Lanchester brand names as well. I think Tata realise that a huge part of the value and potential of their purchase is in not destroying the names and the image, but building on them and like many of us in the trade, I am pretty excited to see just what the future holds for these iconic brands.
$2.3 Billion is a lot of money and Tata who also own such well known companies as Tetley Tea and Corus Steel, intends to expand its car making business way beyond India and develop itself into a major international automotive manufacturer.
A deal has been done for Ford to continue to supply engines and other components to both Jaguar and Land Rover and its in-house finance arm will continue to provide the finance facilities for both the dealerships and the customers for up to a year. It’s also stated that Ford will pay something like $600m into the Jaguar & Land Rover pension fund
This deal is as much about Ford as it is Tata and sitting here today, it seems a long way from when Ford trumpeted the launch of its “Premier Automotive Group” concept, encompassing Ford, Aston Martin, Volvo, Jaguar, Land Rover, Lincoln. With just Ford, Lincoln and Volvo left, and many rumours suggesting that Ford would dearly love to unload the Swedish car maker, it appears that Ford are heading back to their routes and that the empire building phase is well and truly over.
Ford continues to struggle in North America and is in the process of slimming down its operations and cutting costs. However, they are on target for recovery earlier than they expected and the European arm of Ford, is already turning in good profits, despite having invested heavily in new product. Were I a Ford dealer at the moment, I would think it would be a pretty good place to be.
So what’s round the corner for Tata. Its no secret that Ford has not made a profit with Jaguar since it purchased the luxury car-maker for £1.6bn back in 1989.
Ford purchased Land Rover in 2000 for £1.7bn. and its said to have always been always profitable. Between them, the two brands employ around 16,000 people in the UK and Tata have already said they are not planning to make any large-scale job cuts or changes to the operations and the unions seems pretty chuffed at the way Tata management has been working with the employees, the trade unions and of course, government officials.
In a statement, Tata said ‘We are very pleased at the prospect of Jaguar and Land Rover being a significant part of our automotive business,’ Tata said ‘We have enormous respect for the two brands and will endeavour to preserve and build on their heritage and competitiveness, keeping their identities intact. We aim to support their growth, while holding true to our principles of allowing the management and employees to bring their experience and expertise to bear on the growth of the business.’
No one can call the long term future for Jaguar & Land Rover, or even tell if they will remain building cars in the UK past that “5 Year” period that’s mentioned so often. Clearly, there is a massive workforce in India and at some point, the UK factories are going to start to wear out, so you cant help but wonder if new plant might be built on India, rather than the West Midlands.
Trying to be objective here, I really can’t think of a better outcome for Jaguar & Land Rover than this take over by Tata, particularly as Tata’s charismatic 70 year old Chairman Ratan Tata is still very much at the helm.
Wisden of business, lists Ratan Tata amongst the 25 most influential businessmen in the world, depite that, Ratan Tata, is shy man, he rarely features in the society glossies, drives himself to work in a Tata car and has lived for years in a book-crammed, dog-filled bachelor flat in Mumbai’s Colaba district.
A good man, his dream and his promise to the people of India has been to enable everyone in India to have mobility and to get around and to manufacture a car costing just 100,000 rupees (£1300). In January 2008, he realised his dream by launching his peoples car, the “Nano” in New Delhi Auto Expo. Three models of this cute little snub nosed hatchback were announced, and Ratan Tata delivered on his commitment to develop a car costing only 100,000 rupees, adding that “a promise is a promise,” To put this into perspective, a DVD player in a Lexus costs more in India than a new “Nano” does.
I feel that Jaguar & Land Rover are in good hands and although no one can predict the future, its unusual to have such as huge company headed by such a principled man as Rata Tata and for that reason alone I am pretty sure the brands are safe, but just in case you were wondering about Tata the company, well this very quiet understated powerhouse which is Tata now includes the world’s second largest tea business (Tata Tea); Asia’s largest software firm (Tata Consultancy Services); the world’s fifth largest steel giant (Tata Steel); a plush worldwide hotel chain (Indian Hotels); the world’s fifth largest truck maker (Tata Motors) and an automobile manufacturing spectrum that spans everything from a bicycle factory in Zambia, a £1300 cheap car, South Korea’s Daewoo commercial vehicles and now £70,000 luxury Jaguar & Land Rover models.
Ratan Tata has done it without experimenting with his hairstyle, riding fancy motorbikes or dating Bollywood heroines (he remains single.) In a recent interview, he confessed he “never had the desire to own a yacht”.
But the global corporate world now knows that if ever he spots a yacht-making business which he can grow, he might buy it.
