It's Tata to Jaguar as Ford finally gets rid

It's taken a while, but Ford has finally agreed to sell Jaguar and Land Rover to Indian conglomerate Tata.

Last Updated: 06 Nov 2012

The ailing US car-maker said today that it is finally selling off the two famous British marques, after concluding a $2.3bn deal with Tata Motors. It’s taken months of negotiation to reach an agreement - although since the credit market turmoil put paid to any chance of private equity sticking its oar in, the outcome has never really been in doubt.

But before we start lamenting the demise of another great British industry, the theory is that Tata’s victory ought to be good news for the 20,000-odd UK workers involved with Jaguar and Land Rover, either at its manufacturing plants in the West Midlands and Merseyside, or at the Ford factories that currently supply their parts – Tata apparently has no immediate plans to shift production to India.

Of course it might well be singing a very different tune in a few years’ time, once all the fuss dies down – but for now, it’s making all the right noises. It said today it had ‘enormous respect for the two brands’ and would ‘endeavour to preserve and build on their heritage and competitiveness, keeping their identities intact’. The idea seems to be that the acquisition will help Tata diversify outside India and gain entrance to the luxury end of the market; at the moment, it’s probably best known for making the world’s cheapest car (the Nano, which costs about £1,200).

But while the sale is an impressive bit of muscle-flexing from a new business superpower (Tata now has a market value of about $70bn), it’s also a slightly embarrassing admission of defeat from Ford. Its ownership of Jaguar in particular has been a disaster – it spent $2.5bn on the marque in 1989 and has apparently invested about $10bn since, but Jaguar is still losing money hand over fist (probably about $550m this year). In fact, the association with Ford has done Jaguar more harm than good, particularly in the US - sales have plummeted as punters realised that most of its new models were basically just re-badged Mondeos with knobs on.

Land Rover is still in the black, but like Jaguar, it needs some serious investment over the coming years. And with the eye-watering losses it’s currently making, Ford clearly decided that it couldn’t afford to do this. Even if that meant selling the two marques on the cheap (and since they made a combined profit of £250m last year, some analysts reckon that’s exactly what it’s done).

Still, perhaps like us it can take solace from reading the Indian newspaper accounts of the sale. With their elegant and graceful style, it almost takes us back to a time when Jaguar actually used to make money...

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