Well Ford Motor Company has done it, After spending billions of dollars on Jaguar and Land Rover, they said goodbye on the British automakers Wednesday, and India’s Tata Motors got them for only a 1/3 of what FoMoCo paid for them!!! Tata(giggle) got the good end of this I would say!
This definitely shows that India is looking to step into the big leagues of the automakers now with those two name’s in their possession. Ford got about $1.7 billion for both names which is a very low figure comparing what they paid to get them, like $2.5 billion for Jaguar back in ’89 and $2.7 billion for LR just 8 years ago. With everything ford has put into those brands, plus counting marketing, losses etc, ford has cranked out around 10 Billion dollars…yeah let those numbers sink in..OUCH!
Well Ford has an idea, they knew they needed to dump these brands so that they can primarily focus on their Main brands, lets not discount names like Jag and LR but they only brought ford debt, no profit. Tata is India’s oldest and largest conglomerate, they have their hands in the steel buisness, information technology and as we seen in the automotive market, they released the cheapest automobile in the world, only costing $2500 and looks like a Smart four-two BUT its a 4 Seater. It should,keyword here “should” have the cash to save the two brands and develop new products to better compete with the other automakers of the world.
Erich Merkle who is the vice president of the auto industry forecasting for the consulting firm IRN Inc. has recently said “the proceeds of the deal aren’t enough to rescue Ford’s finances, but the sale will allow the company to focus on restructuring its core brands and that Jaguar has never made a profit in the nine years Ford has owned it.”
Tata has released that Ford will continue to supply engines, transmissions etc for around five to nine years and also expects no significant changes for Jaguar and Land Rover’s 16,000 workers, and plan on keeping the heritage of the brands which I think is smart considering these two automakers are well known to be of British origin.
See, Ford was hoping to turn Jaguar into a brand that could compete with BMW and Mercedes-Benz. But its X-Type model which was brought out in 2001 focused on bringing in younger buyers sold poorly and was criticized for its styling. If you have seen the X-type, it looks a lot like the already fames S-Type, introducing a smaller version seemed to be a big mistake, Jaguar’s U.S. sales were down 24% last year while in the world of Land Rover, thanks to its Range Rover Sport and LR2, sales rose 4% last year.
Ford lost $12.6 billion in ’06 and $2.7 billion last year..15.3 BILLION in Two years!! thats about $15,333,000,000.00…thats staggering when you add the zero’s lol. Its no wonder they have been looking to sell the brands for months! Ford has even mortgaged their assets to keep operating and expects to burn up $12 billion to $14 billion until ’09, they expect to be profitable again in the following year.
So yeah, does your head hurt after all those figures? Mine does a little bit lol
Anyways, Thats todays edition of the automotive corner ladies and ‘gents. I hope you have enjoyed your self reading this as much as I love to give it to you!
It feels good being in the know doesn’t it?? Ill see you all Thursday in The Mod Shop!
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