Tuesday, March 25, 2008

Jaguar Goes Tata - Sold, But At What Price?

Racing Jaguar, Monterey Festival of Speed, 2006

There's been a, slew of stories on the impending - and long-mooted - sale of Jaguar and Land Rover to India's Tata group over the past week, indicating perhaps that a final resolution is near. As we've mentioned before, this is the latest in the line of disposals by Ford of it's old Premier Auto Group business, assembled back in the days when the company was flush with cash and keen to splash. Alas, buyer's remorse set in very quickly once they found out just how much money it would take to revive Aston Martin, Jaguar, Land Rover and whatever else got thrown into that bucket, and to overcome decades of mis-management by, in the case of Jaguar and Land Rover, that old bogeyman British Leyland. Remind me to do a post one day on some of the wonderous cars those guys managed to produce .... Allegro, Metro or Maxi anyone?

Anyway, new management, new era, new plan: sell the lot just as they turn from cash sinks into cash cows ... maybe. One of the last peices on the block is a job lot of Jaguar and Land Rover (motto, "buy one, get one free"), and after hitting every conceivable buyer in town India's Tata conglomerate is the only one left standing. Despite some reports that the price would be around $2.6 b, pundits are now saying that it won't reach anything like that figure, struggling to deliver $2 b back into Ford's fast-draining coffers (they posted a $2.8 b loss in the 4th quarter alone).

It's tough to have an auction with only one bidder, and it's hard to build value when in the last couple of sales - Aston, anyone? - Ford has accepted what is quite frankly bargain-basement pricing. But Ford has only itself to blame, especially in the case of Jaguar. A string of lack-lustre models tied to unrealistic sales targets took the brand from premium-to-proletariat in a few short years.

Buy high, sell low, and kiss goodbye to countless billions, leaving Ford as a cash-poor producer of volume sheet metal. Now there's a strategy for Harvard Business Review to pick apart.

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