Indian automakers close in on Jag and Land Rover

Posted by: Gail Edmondson on November 8, 2007

Tata.jpg flat mahindra.jpg
Ratan Tata, Chairman of Tata Motors and Anand Mahindra, vice chairman of the Mahindra Group

Anyone who didn’t consider India’s Tata Motors and Mahindra & Mahindra serious bidders for Ford were wrong. The two rivals — both revving with global ambitions — are now short-listed in the contest, together with One Equity Partners.

And the deal could come cheap. Jaguar and Land Rover are estimated to have some $2 billion in pension liabilities each, so Ford actually may have to pay a buyer to take Jaguar and Land Rover. Ford wants to sell the two as a package.

Of course, fixing Jaguar won’t be a joy ride. The company has been losing money for 20 years. And then there is Jaguar’s stab at a modern new design language with the XF, which has horrified some traditionalists. But Land Rover offers the Indian automakers design, research and manufacturing expertise smack in the middle of Europe, and a premium brand to boot. Mahindra is already planning to storm the US market in 2009 with an SUV, and two-and-four-door pickups. And though Tata is set to unveil its one-lakh ($2,500) car in January, it too is determined to go up market.

A deal is expected by yearend. If Tata or Mahindra end up in the driver’s seat, get set for a faster ride into western markets.

Reader Comments

gulfbridge

November 9, 2007 8:53 AM

I’m afraid it looks like Ford has decided to divest itself of these two British brands at any cost. None of the candidates on the short list inspire much confidence that either Jaguar or Land Rover will be around for very much longer. Pity!

Abraham

November 9, 2007 10:00 AM

I personally think, Tata group has the potential to succesfully turn around both British brands.

Tata group is one of best run conglomerates in Asia and they have been around for more than 100 years. They are very diversified, with market leadership(in places where they operate) in hospitality industry(Taj hotels and resorts), Beverages(Tata Tea), and Information Technology(TCS).

Also they are coming up really strong in steel, recently bought Corus Steel in UK for $12B and is currently No.5 steel manufacturer in the world. Couple of years back they bought Tetley tea in UK and Daewoo trucking division and integrated these into the Tata fold without any struggle. They are not new to automotive world, they have been market leaders in LCV market in India for a long time. Above all they are widely known as one of the compassionate and socially responsible employers in India.

Mahindra is lesser known, but they have been getting a foothold in US tractor market over the last few years and they are known to nurture global ambition.

I believe Tata is more prepared and more likely to be succesful in running the two British brands.

tim

November 9, 2007 10:01 AM

These candidates have come a long way in a short span since post liberalization. There used to be a day when Indian software companies were told that they could make underwear not software. That's history now. Jaguar has seen no progress in the last 20 years, so lets see whether a new management has to offer. Maybe it turns out to be a Tetley or Corus in making.

PRITHIVI SARWAN

November 9, 2007 1:36 PM

I believe Tata has the ability to manage and run an automobile company succesfully given the fact it has been doing manufacturing of automobiles ranging from trucks, buses to cars over the last 50 years. Tata is still not known in better part of the developed world and I think buying Jaguar and Land Rover would give a philip to it's auto business to reach the global market.

The fact that TATA is running lots of diversified multinational companies from steel, chemicals, information technology, tea and hotels gives them the edge. TATA acquired the Daewoo commercial vechicle unit couple of years back and is managing efficiently.

Mahindra is also well placed in terms of ability to run the companies but stands second to TATA.

Nick

November 9, 2007 1:57 PM

I will go for Tata, never heard of the other two.

Noz

November 9, 2007 8:28 PM

Pity? What's a Pity? The Jag has been a garage-floor cover for many years now, and wetting it with all of its bodily fluids. As to the Land Rover? Would you rather be in one of these mechanical nighmares waiting to happen or a highly dependable Range Rover by Toyota when facing a small herd of angry elephants? A flock of love-sick sheep? How about rampaging natives armed with spears and iPods?

I'd say that it is time to turn over these losers to Tata and Mahindra. They could hardly make more of a shepherd's stew of it. Let Ford eat pizza.

Mohan Nair

November 10, 2007 12:18 AM

Only time will answer the naysayers.

another guy

November 10, 2007 2:18 PM

I have to say both indian company will have a lot to proof if any of them get landrover or jag. They will against the current which both are luxury brand. And say luxury car from India will not impress a lot of high end class around the world, even in India. Luxury items come with a lot of premiums, and premiums are for names, not new comers. I am sorry to say that but that is how human thinks. I think both company can be more successful in other business, now is not the time for luxury brands.

Joe

November 10, 2007 5:26 PM

The farmers in the heartland would have heard of M&M. M&M sells tractors and farming equipment. While whizzing thro' ohio farm country, I heard a commercial for M&M tractors.

nicknguyen

November 11, 2007 3:52 AM

Very soon, Land Rover will have a stinking and low IQ image. Ford is so low now!

Yogbert

November 11, 2007 11:23 AM

Ten years ago, as I was completing my undergraduate studies as a mechanical engineer in India, not even in my wildest dreams could I imagine that an Indian automobile manufacturer would even consider making a bid for a globally reputed brand like Land Rover or Jaguar. But since then, things have changed drastically, and today, there is no doubt in my mind that Tata and Mahindra are in a position where they can consider taking over these brands. And if either ends up with them, they are poised to do a good job with turning them around. For instance, Tata has decades of experience dealing with delicate labor situations and has a strong reputation as an employee friendly company. Their years of experience on this front might be just the shot in the arm that is needed for Jaguar and Land Rover to thrive.

venky

November 12, 2007 7:53 AM

It would be nice to see Tata or Mahindra buy the marquee brands, but at what cost? Jaguar, sorry to say , has a storied history, but not a great performer in economic terms. Land rover has a potential to turn profitable...but given oil nearly at $100 a barrel. Gas guzzelers are on the way out. It would be nice if Ford had to pay for divesting the two marquee brands. End of the day it's the bottom line not Pride. I hope common sense prevails

Joseph

November 12, 2007 10:21 AM

Just let the Germans buy Jaguar and Land Rover! Why would Indians want to buy these money losing companies?Considering the history and effects of British colonialism in India, why are Indian companies looking to buy Jaquar and Land Rover? No other Western companies would want to touch those two British brands with a ten foot pole right now. Both Tata and Mahindra should concentrate on producing better vehicles in India rather than trying to waste their money and their time by purchasing these useless and worthless British brands.

shirish kokatay - norristown PA

November 12, 2007 10:32 AM

Nobody had heard of Toyota, Honda, Subaru etc in the late sixties, yet these three brands have turned the US auto industry on it ear within three decades while the big three did their best imitation of deer-in-a-head-light response to an imminent threat.

The winning strategy for the Japanese was simple, offer the market good quality and reliability in a powerful combination with reasonable/low prices. They have since then bolsterd this winning formula with continous improvements and by moving in to upscale markets and now in the highly profitable SUV/ Pickup Truck segements.

Tata and Mahindra have learned the quality lessons very well from the Japanese car makers, and are currently in the process of making a major breakthrough in offering ultra low price products - Tata new $2500 car to be offered in 2008. Both these companies are hungry and eager to exploit their natural strengths in low cost and world class engineering and manufacturing

Perhaps we may be witnessing a beginning of a new and a major disruption in the global automobile industry, stay tuned for a bumpy yet exciting ride.

Sanmitra

November 12, 2007 11:19 AM

I agree Jaguar and Land Rover may not seem to be the best buys with respect to their current and historical sales figures. However, they are a smart buy for both Mahindra and TATA.

Reasons:

1)TATA and Mahindra are both looking to expand globally and both Land Rover and Jaguar are established brands.

2)In the developed world, baby boomers are incresing and they also are the ones with the largest spending power. Logically thinking, they would rather go for a conventional classy old school brand like the Jaguar rather than say a Audi, Porche or a BMW

3) Sure Oil is expensive as hell, but with new technologies such as hybrid, electric,ethanol, and mayb even compressed air car(remember Tata is researching a compressed air engine system, along with a French company), SUV's may regain popularity

4)The weaknesses of Jaguar are mainly crappy marketing, substandard quality (as compared to say BMW), inefficient production - sales ratio, and lack of innovation. All of these weaknesses can be improved by both TATA or Mahindra (TATA can pair up with Fiat to help out in it's engineering, whereas TATA marketing is already topnotch, similarly Mahindra can team up with Renualt for engineering expertiese)

Overall, it is not impossible for either of these to companies to make both these brands profitable

snibber

November 12, 2007 4:06 PM

Having been to India, i would say a more appropriate buy would be a farm as their seem to be more cows on the roads than cars. One equity partners are the obvious choice, the Indians should be concentraiting in sorting out the poverty and over-population in their country.

MagicMarker

November 12, 2007 8:48 PM

Tata acquiring these two brands would be the sounding of a death knell for them. Having spent time working in Tata's Pune car facility trying to help them, I know that there is a long distance for them to travel b4 they approach building cars that would sell in the US. It will be years until they approach the Yugo's quality level.

The winner here would be Tata by gaining some world class styling capability but Tata will not bring anything beneficial to the table for Jag or LR - except maybe a cash infusion - which isn't such a bad thing after spending so much time in the Ford Motor universe.

Noz

November 16, 2007 8:31 PM

Good grief! Lotsa very interesting points of view. Of late I have tried very hard to see things from other than the narrow-minded American standpoint, and I recommend this mental exercise to others with no reservations. Not that narrow-mindedness is a trait of ours alone, but we should know better. And we don't. This is now coming home to bite us where it hurts, and not just our fat tails.

An interesting thought is that India is trying to correct the hash that Jolly Olde has made of Jag and Land Rover since their inception, not to mention Ford which only dug a deeper pit. Far from wanting to embarrass the Brits, those who did so much damage to India for such a long time, I prefer to believe what I read--that the brands are worth saving for that sake alone and perhaps the excellent (and getting better by the day) engineers in India will be able to pull this rabbit from a trilby, or whatever the English wear these days to keep their heads hot. (Sorry, I could not resist that one.) Socialism is an evil. Jolly Olde is there already and the USA is perched on the buttered rim with the apparent strength of those all-time losers, the Crats.

Rahu

November 20, 2007 5:12 AM

I think TATA has the capacity to revive a brand like Jaguar which needs a very strong stable owner like TATA.

Robert Sherman

November 20, 2007 11:37 AM

tata motors may be successful or not
buy infrastructure in india is a lock.
They are 10 years behind china. that is changing.Investment is increasing at 30%
and profits too.
This is a multi year play
India has many infrastructure funds, but are limited to India citizens or past citizens
How should non indians play?

SimonSez

November 25, 2007 10:54 AM

Tata Motors is my choice of the final 3 bidders. Like it or not, they are the best bet for the long term for both Jaguar and Land Rover. There are benefits to both sides. Tata gets technology and car building know-how, and Jaguar/Land Rover gets some much needed cash infusion. They also get a very patient permanent parent (not a foster parent) company. There is a lot of bashing of Jaguar and Land Rover's engineering capabilities. Most people who make these comments have no clue of the car business. Like the Mini Cooper? Guess what, the gen 1 was designed by Land Rover. The Land Rover group also developed the business case. Tata may be able to reduce costs by tapping into their steel production and auto components business where it doesn't violate their commitments to Unite.

Amit kumar

November 28, 2007 11:27 PM

Whenever I hear about TATA, I see India. TATA has the ability to run these two brand name companies, guaranteeing stablity and profits. TATA should take over JAGUAR and LAND ROVER.

Post a comment

 

About

Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

BW Mall - Sponsored Links

Buy a link now!