Tata Buys Land Rover & Jaguar from Ford

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Tata just bought the Land Rover and Jaguar brands from Ford for $2.3 billion.

How Tata will make it work:

• Utilize Ford technology and combine with partners such as Fiat to further improve mutual quality
• Relaunch quality image with a 100,000 mile bumper to bumper warranty or ten year warranty. Hyundai did a similar act when they turned around from having some of the poorest quality cars to being the #1 non-premium brand in JD Powers Quality Surveys.
• Consolidate chassis and focus on the luxury image and establish strong reputation before extending down into lower-priced cars.
• Share platforms with Fiat and lean on Fiat to establish distinctive styling.
• Concentrate all your efforts on the engine and transmission, sourcing Fiat’s best and selling them Land Rover/Jaguar’s best.
• Sourcing even a small percentage of mundane parts from India will save hundreds of millions in cost.

Tata and India in general has a general flair that is more in line with Europe than America. As a result, I would expect Tata to forge a strong alliance with Fiat with whom it already has a joint-venture plant in India building engines. Fiat plans on bringing the Alfa Romeo brand back to the U.S. and the Land Rover/Jaguar dealer network could help Fiat quickly establish a

distributorship in America. In turn Fiat could give Tata access to its European dealer network. Fiat would also love to have the larger platforms that Land Rover and Jaguar could bring them. Selling some chassis to Fiat would enable Tata to establish better scale. Fiat could certainly help Tata establish a distinctive styling for the acquired brands. One thing is certain. Expect Fiat and Tata to forge close ties once this deal is consumated.

I believe Tata will improve the brands distribution and market share in Europe and domestically in India as well as nearby China. India and China have growing luxury appetites and this purchase will eventually feed those markets.

Verdict: Thumbs up. Tata bought for $2.3 billion what Ford paid $4.5. Ford improved the brands somewhat, but otherwise mismanaged them. Tata with its smaller portfolio of vehicles will be able to focus and give these brands the attention they deserve.