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Tata’s Acquisition of Jaguar Land

Tata Motor’s Product Profile

Rs. in Crore üTata Motors Limited is India's largest automobile company, with revenues of Rs. 32,426 crores (USD 7.2 billion) in 2006-07. üIt is the leader by far in commercial vehicles in each segment, and the second largest in the passenger vehicles market. üThe company is the world's fifth largest medium and heavy commercial vehicle manufacturer, and the world's second largest medium and heavy bus manufacturer.

Ford Motor Company
Figures in US mn $ üFounded by Henry Ford in 16th June, 1903 in Michigan,USA üWorld’s Third Largest automaker based on worldwide vehicle sales in 2007 üIn 2007, Ford became the third-ranked automaker in US sales after General Motors and Toyota, falling from the second-ranked automaker slot for the first time in the previous 56 years

Ford Motor’s Product Profile

Key Points:

ØTata motors acquired Jaguar and Land Rover for $2.3billion on a cash-free, debt-free basis ØContribution of $600 million by Ford to JLR Pension Plans ØDavid Smith, the acting CEO of Jaguar and Land Rover will continue in his position. ØTata gets access to Ford's hybrid and low-emission powertrain technology ØThe purchase consideration includes the ownership by Jaguar and Land Rover or perpetual royalty-free licences of all necessary Intellectual Property Rights, manufacturing plants, two advanced design centres in the UK and worldwide network of National Sales Companies.

ec o n o m ict i m es .i n di Ford purchased Jaguar in 1989 in a bidding war with General Motors paying 2.5billion dollars which was quite higher than industry estimates (1.3 billion) Ø Land Rover was sold by BMW to Ford Motor Company for 2.7billion dollars in 2000 Ø Jaguar sales in the U.S. were down by 25.7% in May 2007 from the same period a year ago. Land Rover sales were down by1.8% despite having an entirely new model, the LR2, on sale.
Ø

Reason for the Deal (Contd.)
Ø Jaguar sales dropped 33% in the US and Europe in the first two months of 2008 Ø Land Rover sales fell 13% in the US and around 7.7% in Europe during the same period. Ø Ford has lost 15.3 billion dollars over the past two years and responded by shuttering plants and slashing its workforce in North America by more than 40,000 workers. Ø Ford is getting less than half what it paid for the two brands Ø Ford sold Jaguar and Land Rover as a package since the engineering, purchasing, and distribution of the two brands have become interdependent as Ford has tried to find efficiencies running the businesses. Jaguars and Land Rovers are even manufactured at a common plant today Ø Ford is considering a restructuring plan in North America with the amount it is getting from the deal

Threats:

Recent Developmentsin some markets ØThough Land Rover sales have been softening

especially in Europe, on a six month basis Land Rover sales have gone up over 2007 globally, mainly because of higher volume of sales in Russia and China. ØIn June 2008 Jaguar was sold 3836units in West Europe as compared to 2924units sold in June 2007. It was a 31% increase.

Ø The Indian Automobile Market is expected to grow at a CAGR of 9.5 percent amounting to Rs. 13,008 million by 2010 Ø The liberalization policies followed by the Indian government had been inviting foreign investors and manufacturers to participate in the car market in India. Ø It is expected that by 2030, the Indian car market will be the 3rd largest car market across the globe.

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