Tata the giant Indian motor manufacturer acquired Land Rover and Jaguar in March 2008 for $2.3 billion, taking advantage of the weak Dollar. Tata appear to have got an excellent deal but only time will tell just how good a deal it proves to be. But what was this acquisition all about, an organisation that is part of a former colony, getting it's own back on the British? The answer is that most specialists in the industry feel that it was a very well thought out and sound investment for Tata and that was Tata's primary motivation. Everyone's gain is someone else's loss and Ford's loss is considerable; they invested in all some $10 billion in the two companies and then to add to the pain a further $600 million was required to make up the shortfall in both Jaguar's and Land Rover's employee pension fund. Although when you consider Daimler Benzs loss over its purchase and sale of Chrysler it doesn't look so bad; Daimler Benz put a reported $36 billion into Chrysler. Nine years on they found themselves in a position where they had to sell the majority of the company (80.1%) for $7.4 billion. There is always a risk with these acquisitions but if you can buy at the right price, which Tata appear to have done, it's a very good start.
Tata will have little to worry about in the case of Range Rover; it is making money with its highly popular models and they cannot meet the demand from contract hire and leasing companies, for the Range Rover Sport. The Discovery and Freelander models are very much in demand and as much as some complain about the Range Rover's fuel consumption, sales continue unaffected. If there are going to be significant changes it will be with Jaguar.
It is however in the area of fuel efficiency where the real challenges lay ahead; although motorists continue to buy vehicles with high fuel consumption, governments are setting targets which will have to be met in order to reduce carbon dioxide emissions. The most economical Land Rover model, the Freelander, doesn't come close to meeting the proposal by the European Union of a carbon dioxide output of 130g/km across a manufacturer's range of models. The system that switches off a car engine each time it comes to a stop in traffic is to be introduced to the Freelander in 2009. However making all their models lighter is something that Tata will also have to look at.
It would certainly appear that Tata are going to benefit from the Land Rover technology with regard to the manufacture of their own vehicles, that currently use very old technology and their cars are very outdated by our standards. They are at the moment manufacturing cars that couldn't be more different from Land Rover and Jaguar, selling for about 1,250.
Jaguar is likely to be far more challenging for Tata, the company is loosing money and certainly contract hire companies have seen a considerable drop off in demand for Jaguars in the past five years. Ford made considerable progress in terms of Jaguar's manufacturing technology, although in practice, as with any takeover, there is a limit as to how much a company can interfere with a long established organization, before it knocks it off track. That is certainly what appeared to happen, when Ford took over Jaguar, Ford has been strongly criticised for interfering too much.
The ill-conceived X Type Jaguar is a case in question. The model was designed to challenge the BMW 3 Series market, attracting the younger sportier driver. To their dismay it quickly became a favourite with retirees. Many downgrading from their larger Jaguar to a car that was more economical but still a Jaguar, although some observers argued that it was more like a Mondeo than a Jaguar. Jaguar tried hard through advertising to attract the younger driver but soon it became difficult to spot an X Type that didn't have occupants with white hair and the advertising had little effect. Many thought that the model would be abandoned but it continued in production. N increase in the cost of fuel may help the model.
Presumably Tata will allow Jaguar to go back to being a high quality manufacturer producing a smaller number of prestige cars. It is generally recognized that Ford's plan to make Jaguar into a mass production car was disastrous for the company. This move appeared to partially stem from a fear that Ford had, that motorists were going stop buying large engine cars. In practice there seems little that governments or environmentalists can do to put buyers off large cars. Looking at sales figures produced by contract hire and leasing companies it is difficult to detect any change in the sale of large engine cars.
Tata's takeover of Jaguar has coincided with the launch of the elegant XF model; contract hire and leasing companies are seeing a strong demand for the car. The XF should do well in the US, once the Dollar starts to regain its strength. Jaguar has inevitably suffered in America as the weak Dollar has increased the cost of its cars to the American buyer. The takeover of Land Rover and Jaguar should prove beneficial to both companies in the long term. Ratan Tata has made it clear that he does not intend to meddle with the companies, as he wants them to retain their individual character. Some complained that Jaguar and Land Rover would no longer be British, forgetting of course that there is nothing British about Ford, their previous owner. Most people probably think that Tetley Tea is very British but Tata also owns Tetley Tea.