- The Washington Times - Thursday, March 27, 2008

DETROIT (AP) — Ford Motor Co. is selling its storied Jaguar and Land Rover businesses to India’s Tata Motors Ltd. in a deal that will net the U.S. automaker $1.7 billion — roughly a third of the price it paid for the two luxury brands.

The deal announced yesterday will expand the Indian carmaker’s reach around the globe and give Jaguar and Land Rover badly needed capital to update and expand their product lines.

The sale had been in the works for months as cash-strapped Ford sought money to fund its turnaround plan.

Tata will pay $2.3 billion for the British brands, but Ford will pay about $600 million into the Jaguar-Land Rover pension fund when the deal closes, Tata’s statement said.

Ford bought Jaguar for $2.5 billion in 1989 and Land Rover for $2.7 billion in 2000. But the Dearborn-based automaker has struggled and wants to focus on its main brands.

Selling the companies at such a loss clearly shows buying them was a mistake for Ford, said Erich Merkle, vice president of auto-industry forecasting for the consulting company IRN Inc. in Grand Rapids, Mich.

Jaguar never has made a profit under Ford, Mr. Merkle said.

The net proceeds aren’t enough to rescue Ford’s finances, but the sale will allow the company to focus on its core Ford brands, Mr. Merkle said.

Tata should have the cash to rescue the brands and develop new products to better compete with luxury automakers such as BMW AG, Mr. Merkle said.

Tata said it expects no significant changes in the terms of employment for Jaguar and Land Rover’s 16,000 workers. It said the transfer of the brands will occur at the end of the second quarter.

The sale raises the Tata conglomerate’s profile on the world stage, said V.G. Ramakrishnan, the lead auto analyst with the consulting firm Frost and Sullivan India.

“It gives them a much better branding image in the global market,” Mr. Ramakrishnan said. “This is another important landmark step of showcasing that Indian companies are arriving on the global landscape. Many people will see this deal as the future of things to come. You will see more companies out of India acquiring global companies. They want to be seen as major global players.”

In England, some workers were upbeat about the change, but others worried about the future.

“People seem to be generally happy about the buyout. Tata has a reputation as a business which is going places and has ambition to be a major market force,” said Lee Betteridge, a 34-year-old Jaguar toolmaker.

But Paul Hoyte, 35, a Land Rover worker, said, “I am pleased I have kept my job. But for how long?”

Tata Motors built the first fully Indian-designed car. In contrast to the high prices that Jaguars and Land Rovers sell for, Tata recently announced plans to build a $2,500 car later this year. Jaguars in the United States have sticker prices starting around $50,000 and can cost nearly twice that amount.

Roger Maddison, an official with Unite, Jaguar and Land Rover’s main labor union, said the deal is good news for the automakers’ employees as well as those who work for parts suppliers.

“Unite has secured written guarantees for all five UK plants on staffing levels, employee terms and conditions, including pensions, and sourcing agreements. The sale ensures our members’ futures, and we look forward to working with Tata,” Mr. Maddison said in a statement.

Ford CEO Alan Mulally said in a statement that the British brands are leaving Ford in good shape.

“Now, it is time for Ford to concentrate on integrating the Ford brand globally, as we implement our plan to create a strong Ford Motor Company that delivers profitable growth for all.”

Mr. Mulally has said Ford will invest the proceeds from the sale in quality and product development.

Tata said in its statement Ford will continue to supply engines, transmissions and other components “for differing periods.” Ford also will continue to provide environmental and other technologies as well as engineering support.

Tata Chairman Ratan N. Tata said his company will try to build on the brands’ heritage, 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,” he said in a statement.

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