Land Rover, Jaguar are now officially Indian brands

Land Rover, Jaguar are now officially Indian brands
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First Published: Tue, Jun 03 2008. 12 08 AM IST

Done deal: (from left) Don LeClair, executive vice-president and CFO of Ford Motor Co.; Lewis Booth, executive vice-president of Ford Motor Co., who has responsibility for Ford Europe, Volvo, Jaguar a
Done deal: (from left) Don LeClair, executive vice-president and CFO of Ford Motor Co.; Lewis Booth, executive vice-president of Ford Motor Co., who has responsibility for Ford Europe, Volvo, Jaguar a
Updated: Tue, Jun 03 2008. 12 08 AM IST
Mumbai: Tata Motors Ltd, the country’s largest vehicle maker by revenue, said on Monday that it had completed the purchase of Jaguar and Land Rover, marking the “official” transfer of two iconic British brands owned by an American firm to an Indian company. Tata Motors paid $2.3 billion to buy the brands from Ford Motor Co. outbidding private equity firms and Indian utility vehicle maker Mahindra and Mahindra Ltd.
Ford had put the two brands on the block to shore up its own failing finances, and Tata has bought into them at a time when global auto sales are slowing amid soaring prices of fuel and raw materials such as steel.
Ratan Tata, chairman of Tata Motors, said in a statement that “Jaguar (and) Land Rover will retain their distinctive identities and continue to pursue their respective business plans.” The firm also confirmed David Smith, the acting chief executive officer of Jaguar and Land Rover, will take over as CEO of the business.
Done deal: (from left) Don LeClair, executive vice-president and CFO of Ford Motor Co.; Lewis Booth, executive vice-president of Ford Motor Co., who has responsibility for Ford Europe, Volvo, Jaguar and Land Rover (JLR); David Smith, CEO, JLR; Ratan Tata, chairman of Tata Motors; Ravi Kant, MD of Tata Motors; and C. Ramakrishnan, CFO, at the handing over ceremony at the JLR headquarters in Gaydon, UK.
However, even as Tata gets its arms around the two brands, rival global car makers are scaling back production because people just aren’t buying enough cars, and certainly not big fuel guzzlers and sports utility vehicles such as the Land Rover.
Vehicles sales in the US, the second largest market for both Jaguar and Land Rover after the UK, are already slowing and people are dumping larger vehicles in favour of smaller ones after record oil prices have forced consumers to either scale back commuting or opt for vehicles that give more miles per gallon. Market researcher JD Power and Associates predicts that US vehicle sales may slump to 14.95 million in 2008 from 16.1 million a year ago because of a cooling economy.
Worse, the two brands’ sales in the UK, the home market, have been anything but scorching. Land Rover’s sales in the UK between January and April have fallen 2% from a year ago, while Jaguar’s sales have grown a paltry 1% in the same period, according to figures from the Society of Motor Manufacturers and Traders Ltd (SMMT).
The European Union is also proposing stricter carbon dioxide emissions norms, which is further going to hurt the sales of Jaguar and Land Rover in Europe, since these cars have more powerful gas-guzzling engines.
“The total European market is not very good because of global pressures (such as) credit squeeze and the impact of oil prices,” said Nigel Griffiths, who tracks the European and international automotive markets for consulting firm Global Insight Inc. “There is a general slowdown led by the North American market. The options for Tata (Motors) are both interesting and challenging. But at this moment it’s not clear if they will have enough new products, enough money to invest.”
And even as the dust settles on the acquisition, Tata Motors is facing a slowdown in the domestic market, where sales have been hit due to higher interest rates and tighter credit conditions. Meanwhile, “an unprecedented hike in input costs” is hurting the entire industry, according to Tata Motors’ managing director Ravi Kant. “The automobile industry is being squeezed,” he said in an interview last week. In India, as people wait for the world’s cheapest car, Tata Nano, bets are on that rising commodity prices will derail the Rs1 lakh promise made by Tata, almost as soon as the car is launched later this year.
With this acquisition, Tata Motors now has “ownership of Jaguar and Land Rover or perpetual royalty-free licences of all necessary intellectual property rights, manufacturing plants, two advanced design centres in the UK, and worldwide network of national sales companies,” the company said in a statement.
It has also entered into long-term agreements with Ford for the supply of engines, stampings and other components for Jaguar and Land Rover. Ford Motor Credit will also continue to provide financing for Jaguar Land Rover dealers during the transition period. In the meantime, Tata Motors is in negotiations with auto financing companies in the UK, Europe and the US and is expected to select a partner shortly.
ammar.m@livemint.com
Bloomberg contributed to this story.
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First Published: Tue, Jun 03 2008. 12 08 AM IST