In what should by now come as a surprise to no one, India's Tata Motors Limited has purchased Jaguar Cars Ltd. and Land Rover from the Ford Motor Company. The deal, some $2.3 billion (US) and nearly two years in the making, isn't at draconian as it may, at first, seem.
Ford will continue to supply engines, vehicle components and variety of technologies. They will continue to operate Franchise Agreements. They will continue to provide financing through Ford Motor Company Credit to Jaguar and Land Rover dealers and customers. And they will continue to pay $600 million into the Jaguar-Land Rover pension fund. That leaves them with a net of about a third of what Ford paid for Jaguar and Land Rover in the first place; $2.5 million and $2.7 million respectively, but at this point Ford sees it as necessary in order to take a better focus on their core brands. Jaguar, at least, has never made a profit for the company, and it appears time for the company to cut its losses.
So what exactly will change? Tata will have the freedom to develop these premium brands as it sees fit, both in the existing and emerging markets; India chief among them. The deal was also contingent upon Tata maintaining manufacturing bases in the U.K. and retaining the current 16,000 employees, although for how long has not been reliably disclosed.
And Ford? They get a hefty chunk of change to help bail them out of one of the worst debt scenarios the world's third-largest automaker has seen in its entire history.
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