Tata the giant Indian motor manufacturer acquired Land Rover and Jaguar in March 2008 for $2.3 billion, taking advantage of the weak Dollar. Tata appear to have got an excellent deal but only time will tell just how good a deal it proves to be. But what was this acquisition all about, an organisation that is part of a former colony, getting it's own back on the British? The answer is that most specialists in the industry feel that it was a very well thought out and sound investment for Tata and that was Tata's primary motivation. Everyone's gain is someone else's loss and Ford's loss is considerable; they invested in all some $10 billion in the two companies and then to add to the pain a further $600 million was required to make up the shortfall in both Jaguar's and Land Rover's employee pension fund. Although when you consider Daimler Benzs loss over its purchase and sale of Chrysler it doesn't look so bad; Daimler Benz put a reported $36 billion into Chrysler. Nine years on they found themselves in a position where they had to sell the majority of the company (80.1%) for $7.4 billion. There is always a risk with these acquisitions but if you can buy at the right price, which Tata appear to have done, it's a very good start.
It is not expected that much will need to change within Land Rover, as the company is doing very well; contract hire and leasing companies struggle to keep up with the demand for the Range Rover Sport. Both the Freelander and Discovery are very successful models. Land Rover has attracted criticism because the models are not fuel-efficient but it has little effect on sales, the company continues to make good profits. There may well need to be changes within Jaguar, which is not enjoying the same success as Land Rover.
It is however in the area of fuel efficiency where the real challenges lay ahead; although motorists continue to buy vehicles with high fuel consumption, governments are setting targets which will have to be met in order to reduce carbon dioxide emissions. The most economical Land Rover model, the Freelander, doesn't come close to meeting the proposal by the European Union of a carbon dioxide output of 130g/km across a manufacturer's range of models. The system that switches off a car engine each time it comes to a stop in traffic is to be introduced to the Freelander in 2009. However making all their models lighter is something that Tata will also have to look at.
It would certainly appear that Tata are going to benefit from the Land Rover technology with regard to the manufacture of their own vehicles, that currently use very old technology and their cars are very outdated by our standards. They are at the moment manufacturing cars that couldn't be more different from Land Rover and Jaguar, selling for about 1,250.
When Ford Acquired Jaguar it was generally felt that they interfered too much with the day to day running of the company, Jaguar has always needed its independence and as can be seen from the days of British Leyland, doesn't function well when there is outside interference. This is going to present a real challenge for Tata, because the fact is the company is loosing money, so something needs to be done. Ford made great advances with Jaguar's manufacturing technology but the company has failed financially. Tata needs to find a way of turning that around.
Ford's interference with Jaguar was demonstrated when the X Type was introduced. Ford fearing that motorists were going to move away from buying large cars came up with the idea of the X Type that they thought would sell in large numbers to the typical BMW 3 Series buyer. They could not have been more wrong; it was bought by the retired for pottering around town and going up to the golf club. An image that they tried hard to change through advertising but couldn't. Perhaps they should have started with a sporty M3 type model, firmly establishing its image, and then they could have introduced the smaller more economical versions. Using Ford Mondeo parts, which cheapened the car, also tarnished the model's image.
It is thought that Tata will allow Jaguar to go back to doing what it knows best, producing luxury prestige cars. It would be surprising if The X Type were allowed to continue in production but who knows perhaps Tata will transfer production to India and sell it as a luxury car to wealthy Indians. In any event Tata will have certainly learnt from Ford's mistake in thinking that Jaguar could be appropriate for mass production models.
Tata overall must feel that they have done a good deal in buying Land Rover and Jaguar; the Dollar was very weak at the time and Ford have invested heavily in the new Jaguar XF model, Tata is going to get all the benefit of that investment. The model is likely to be popular with US buyers and here in the UK contract hire and leasing companies are experiencing strong interest in the car. Tata do not appear to be interested in interfering in the day to day running of the two companies; Ratan Tata the company's Chairman was reported as saying "We want to retain the companies image, touch and feel. They will of course want to return Jaguar to profitability as soon as possible; it will be interesting to see how they are going to do that but presumably some form of restructuring will be inevitable. Ay least Tata are not known for large scale lay offs when they take over a company. They do already own Tetley Tea and British Steel and have a good solid reputation. - 15224
It is not expected that much will need to change within Land Rover, as the company is doing very well; contract hire and leasing companies struggle to keep up with the demand for the Range Rover Sport. Both the Freelander and Discovery are very successful models. Land Rover has attracted criticism because the models are not fuel-efficient but it has little effect on sales, the company continues to make good profits. There may well need to be changes within Jaguar, which is not enjoying the same success as Land Rover.
It is however in the area of fuel efficiency where the real challenges lay ahead; although motorists continue to buy vehicles with high fuel consumption, governments are setting targets which will have to be met in order to reduce carbon dioxide emissions. The most economical Land Rover model, the Freelander, doesn't come close to meeting the proposal by the European Union of a carbon dioxide output of 130g/km across a manufacturer's range of models. The system that switches off a car engine each time it comes to a stop in traffic is to be introduced to the Freelander in 2009. However making all their models lighter is something that Tata will also have to look at.
It would certainly appear that Tata are going to benefit from the Land Rover technology with regard to the manufacture of their own vehicles, that currently use very old technology and their cars are very outdated by our standards. They are at the moment manufacturing cars that couldn't be more different from Land Rover and Jaguar, selling for about 1,250.
When Ford Acquired Jaguar it was generally felt that they interfered too much with the day to day running of the company, Jaguar has always needed its independence and as can be seen from the days of British Leyland, doesn't function well when there is outside interference. This is going to present a real challenge for Tata, because the fact is the company is loosing money, so something needs to be done. Ford made great advances with Jaguar's manufacturing technology but the company has failed financially. Tata needs to find a way of turning that around.
Ford's interference with Jaguar was demonstrated when the X Type was introduced. Ford fearing that motorists were going to move away from buying large cars came up with the idea of the X Type that they thought would sell in large numbers to the typical BMW 3 Series buyer. They could not have been more wrong; it was bought by the retired for pottering around town and going up to the golf club. An image that they tried hard to change through advertising but couldn't. Perhaps they should have started with a sporty M3 type model, firmly establishing its image, and then they could have introduced the smaller more economical versions. Using Ford Mondeo parts, which cheapened the car, also tarnished the model's image.
It is thought that Tata will allow Jaguar to go back to doing what it knows best, producing luxury prestige cars. It would be surprising if The X Type were allowed to continue in production but who knows perhaps Tata will transfer production to India and sell it as a luxury car to wealthy Indians. In any event Tata will have certainly learnt from Ford's mistake in thinking that Jaguar could be appropriate for mass production models.
Tata overall must feel that they have done a good deal in buying Land Rover and Jaguar; the Dollar was very weak at the time and Ford have invested heavily in the new Jaguar XF model, Tata is going to get all the benefit of that investment. The model is likely to be popular with US buyers and here in the UK contract hire and leasing companies are experiencing strong interest in the car. Tata do not appear to be interested in interfering in the day to day running of the two companies; Ratan Tata the company's Chairman was reported as saying "We want to retain the companies image, touch and feel. They will of course want to return Jaguar to profitability as soon as possible; it will be interesting to see how they are going to do that but presumably some form of restructuring will be inevitable. Ay least Tata are not known for large scale lay offs when they take over a company. They do already own Tetley Tea and British Steel and have a good solid reputation. - 15224
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