Jaguar: Globalisation and the car industry

Indian company Tata, which is India’s biggest vehicle maker, accounts for more than half of the sub-continent’s truck market and has about 20% of India’s car market. It famously launched its new budget Nano car recently, which has been designed to reach India’s growing new middle class.

The firm is likely to pay about £1bn in the deal, although analysts will be keen to see the exact price and terms. The lengthy sale process started last June when Ford announced its intention to sell the companies as a package.

The BBC provide some helpful background at Tata, a growing global giant

Jaguar and Land Rover employ about 16,000 staff at plants across the West Midlands and Merseyside. The car workers union, Unite, has said that Tata was the preferred bidder for the company.

BBC business editor, Robert Peston said: “Tata will commit to following an existing five year plan to invest in and develop the car manufacturing businesses. Jaguar and Land Rover require hundreds of millions in investment over the next few years. And returning Jaguar to profitability will neither be easy or without risks,” he added. To reassure the workforce, Ford will inject £300m into Jaguar and Land Rover pension funds.

The Tata Nano is priced at £1,250. By contrast, the starting price for Jaguar’s latest sports car, the XF is more than £32,000.

It is thought that Ford has invested about $10bn in Jaguar since buying it in 1989, for $2.5bn. Despite that investment, analysts think that Jaguar has never made a profit for Ford. However, another famous brand, Land Rover, has been profitable under Ford’s ownership.

Earlier blogs have covered Globalisation in the world car industry with links to a useful BBC resource on that topic.<