Description: This piece contains a discussion on Ford’s decision to sell Jaguar and Land Rover. Was it a good decision? Tata Motors, the preferred buyer, be able to do justice to two prestiges brand names? This essay was written as the ending term paper for my International Management course.

The Ford Motor Company is an American automaker corporation that has been around since the year 1903 and since then has become a leading industry across the world. It is a widely and respectable company and happens to be known as being the world’s third largest automaker based on worldwide vehicle sales. Since the time the company launched, Ford Motor Company has become “…one of the largest and most profitable companies in the world, as well as being one of the few to survive the Great Depression” (“Ford Motor Company”). For over 100 years it has run continues within the Ford family as has earned the title of “…the largest family-controlled company in the world…” (“Ford Motor Company”). Previously, however, it was in second place world place and had that ranking for over 56 years.

In 2007 the spot of second place was claimed by Toyota based on the dropping sales from the previous year. Furthermore Ford Company has “…reported the largest annual loss in company history in 2006 of $12.7 billion, and estimated that it would not return to profitability until 2009” (“Ford Motor Company”). Weak economy is what Ford Motors states as the reason for their decision to sell Jaguar and Land Rover. But the fact of the matter it that Ford had been losing market share since the mid 90s and these cutbacks most likely are to abolish the fact that “…the company finished the year with a $2.7 billion loss…” (“Ford Motor Company”). This sale may be an intention to reestablish some financial well being but the fact of the matter is Ford may be losing money with this sale. Analysts have reported that:

“…Ford is likely to receive far less money than it originally paid for the British brands. Ford acquired Jaguar in 1989 for $2.5 billion and bought Land Rover in 2000 for $1.9 billion. The two brands combined are expected to fetch no more than $2 billion” (Lienert).

When it comes down to it Ford is hoping that by selling these two brands they will be financial stable enough so that bankruptcy really is not in their future.Since the year 1989 Ford Motors managed to acquire both Land Rover and Jaguar brands from the United Kingdom. For years both brands have been known for their quality and sold with an image of luxury. The consumers all over the world know both brands for their individual accomplishments as well as their unique appeal. The Land Rover itself is known to actually being one of the few longest living brands that consist of SUVs. In the hands of Ford both brands have excelled over years and have won numerous awards for quality and safety. Overall both of these brands are known for being in the “…world’s most prestigious automotive marques” (“Land Rover”). The key factor for success that these two brands have had consists of the way it has been marketed for all these years. These cars have been marketed on quality, reliability, and safety – in other words they have been branded to sell around consumer needs.

Back around 1989, Ford was having a string of bad luck with car brands and in fact two of them decreased during that time period. When Jaguar and Land Rover came into the picture it highly boosted Fords company image and gave them an entirely new consumer base. It was a smart and very strategically company growth move to acquire these two brands because of their differentials and likenesses. Jaguar itself is known for small but glamorous cars. And Land Rover on the other hand is known for larger vehicles such as SUVs. In total, both cars have always covered a fair amount of consumers for Ford. Since their individual births, both brands have managed to heavy impact the automotive industry. Jaguar and Land Rover help build Ford Motors and now that it’s up for the taking, Tata Motors is probably hoping for the same success. But without these two popular and highly demanded brands where would that leave Ford Motors standing? Ford’s hopes are that its other brands are mainstream enough to pull the company ahead along with its new additions such as the Hybrid model it has developed.

Jaguar dealers are not happy to say the least about the decision taken by Ford Motors to sell the brand. Mostly this is because of the fact that, like it was mentioned earlier, the Jaguar image has been built around Ford. In other words, the two have been set together for so many years and have had immense success. Now that Jaguar will be separated from Ford, prospectors are unsure about the brands future. Their doubtfulness is understandable and reasonable. After all building a brand for luxury and having it be successful for this amount of years is a big accomplishment. Not many brands have been around for so many years and have been able to claim the amount of sales that Jaguar has. The bigger apprehension is the fact that it is an Indian market that is planning on acquiring Jaguar:

“…U.S. Jaguar dealers said they opposed the possibility that Ford, Jaguar’s owner, might sell the British luxury car brand to an Indian firm. Two of the three firms that Ford has short listed, as potential purchasers are Indian: Mahindra & Mahindra and Tata Motors. The dealers said that the sale to an Indian company would hurt Jaguar’s image. “I don’t believe the U.S. public is ready for ownership out of India of a luxury car make,” Ken Gorin, chairman of the Jaguar Business Operations Council, told the Wall Street Journal. ‘And I believe it would severely throw a tremendous cast of doubt over the viability of the brand’” (Robinson).

The basic question here is will Tata be able to handle carrying proper ownership of a high prestigious brand like Jaguar. Many dealers have been pondering the doubt if the Indian manufacturing handle an Americanized luxury car and more importantly can they maintain the reliability associated with the brand.

The prime buyer of Jaguar and Land Rover in this buy is the Indian corporation Tata Motors. Tata Motor Company has been around since 1945 when it was first established by making trains. The company is known as the 2nd largest commercial car maker in all of India and it is able to employee over twenty thousand. Tata Motors prides themselves as a corporation that makes extremely cheap cars – a prime example being their latest release called Tata Nano. But just like any other corporation, Tata Motors does have its strength and its weaknesses as well. A major weakness that many people are focusing on is the lack of experience when it comes to handling a luxury brand. The advantages however seem to outweigh that one major weakness:

“Tata Motors have some distinct advantages in comparison to other MNC competitors. There is definite cost advantage as labor cost is 8-9 percent of sales as against 30-35 percent of sales in developed economies. Tata motors have extensive backward and forward linkages and it is strongly interwoven with machine tools and metals sectors. India is an excellent source for IT based engineering solution for products & process Integration. There are strong supporting industries i.e. auto component industry has world-class capabilities. There is huge demand in domestic markets due to infrastructure developments and Tata Motors is able to leverage its knowledge of Indian market” (“Tata Motors”).

Tata has a major competitive advantage when it comes to terms with highly up-to-date technology. In fact the trucks made by Tata Motors “…are reputed for their performance and economy and are the flag bearers in their production activities in India” (“Tata Motors”). Another factor of success that Tata Motors has is the fact that it has said that it will continue to employee the same people. In other words, the same people will be producing the brands and so in theory these brands remain as ‘flawless’ as they are now. This statement does not only reassure the consumer but also all the skeptical dealers these brands have. But the fact is that Ford never truly got either brand to fulfill its true potential. In actuality many people assume them to be British made cars and remain ignorant to the fact that it is now American owned brands. This fact can be an advantage to Tata because they can either choose to remain the brand as is and most consumers will remain blissfully ignorant of the ownership change.

When it comes down to it Tata Motors taking over Jaguar and Land Rover, as its new owner is not a bad thing. It all depends on the management skills this corporation has and whether they can successfully switch their gears to handle luxury brands. It is a fact that the Indian car market is not of as glamorous but this could be the stepping towards changing that. Tata Motors will hopefully “…propel Indian industry as a whole into the luxury branding sphere…” (Yan). Although many are still against and do not easily see this point of view, “…Indian companies [can] take [this] rebuttal as a challenge…” and work all that much harder on continuing the success with these brands (Robinson).

Works Citied

• “Ford Motor Company.” Wikipedia, The Free Encyclopedia. 10 Mar 2008, 19:07 UTC. Wikimedia Foundation, Inc. 11 Mar 2008 <http://en.wikipedia.org/w/index.php?title=Ford_Motor_Company&oldid=197294343>.
• “Land Rover.” Wikipedia, The Free Encyclopedia. 11 Mar 2008, 00:50 UTC. Wikimedia Foundation, Inc. 11 Mar 2008 <http://en.wikipedia.org/w/index.php?title=Land_Rover&oldid=197374187>.
• Lienert, Paul. “Ford Fields Offers for Jaguar, Land Rover.” Inside Lines. 7 Nov. 2007. <http://www.edmunds.com/insideline/do/News/articleId=123341>.
• Robinson, Simon. “Is India Bad for Jaguar?” Time. 14 Dec. 2007. <http://www.time.com/time/business/article/0,8599,1694653,00.html>.
• “Tata Motors.” Wikipedia, The Free Encyclopedia. 10 Mar 2008, 20:52 UTC. Wikimedia Foundation, Inc. 12 Mar 2008 <http://en.wikipedia.org/w/index.php?title=Tata_Motors&oldid=197321143>.
• Yan, Jack. “The Indian Luxury Brand: Jaguar, Land Rover the Vanguards to the West.” The Persuader Blog. 1 Mar. 2008. <http://www.jackyan.com/blog/2008/01/indian-luxury-brand-jaguar-land-rover.html>.