Ford is edging closer to selling off its Land Rover and Jaguar brands to Indian conglomerate, Tata Group.
We caught up with Land Rover and Jaguar CEO, Geoff Polites at the Detroit Motor Show to get the latest mail on the sale, and the future of Land Rover at the hands of a new owner.
Although it isn’t quite signed off just yet, there is daylight between Tata and the number two bidder and it seems clear that on its 60th birthday, Land Rover, along with Jaguar is destined to become the child of Indian parents. Tata Motors, the unit that will be responsible for the British marques, produces smaller, inexpensive cars mainly in India but is now eager to expand its presence internationally. The acquisition of Land Rover and Jaguar (JLR) is also certain to help construct a reputation for better quality and larger cars.
The sale will start the year off light for Ford, who also sold prestige brand Aston Martin in March last year for $A1.16 billion. They hope to double that figure with the new sale, helping to rectify the $A14.4 billion loss for 2006.
Unlike Jaguar who has been losing money for Ford, Land Rover has been steadily progressing financially, posting record sales figures throughout 2007, driven mostly by the Freelander 2. In September last year, Land Rover sold 26,000 cars around the world – 34% more than September 2006. The biggest month, capping off the biggest year in its history with 226,395 cars sold worldwide.
So, given the successful run that Land Rover are experiencing at the moment, will a change of ownership unsettle the off-road marque enough to cause any measurable damage to future growth? Moreover, will handing control to a company known for their mass-produced, cheap vehicles have a detrimental effect on the quality and reputation of, or peoples attitudes towards, the Land Rover name?
Geoff Polites, CEO, JLR suggests not…strongly. Still tight lipped about the new owners, he said if they were to go with Tata, he will be confident about the decision because “..they are a very very successful and a smart operation….led by a very impressive guy”.
Mr Polites has no doubt that Tata would not change the business plan, nor the team. “I wouldn’t expect the new owners to change what we’re working on”.
“We don’t expect them to come in and rip everything up. They might, but that’s certainly not the inclination that we have. Provided it makes sense and it makes money and it’s the right thing for the brand, then they’ll support us.”
Asked if he will stay on under the new ownership, he said “Well you’ll have to ask them that. Personally, yes I would like to stay but the new owners quite rightly have the right to decide whether they want to keep me”.
But he stresses that ownership is not an issue. “It (JLR) has a viable future, regardless of the new owner. I firmly believe that. The ownership to me is not an issue. If we continue to make quality products we will continue to be successful. A third of the people still don’t know that Ford owns Land Rover. It’s not a big deal. Ownership’s not important”.
But Mr Polites does hold Tata in high regard, and admires Tata boss, Ratan Tata. “Tata have been really good sellers of the things they have bought. Tetley Tea is a Tata company; Corus Steel is a Tata company. Feedback I get from those two companies is that Tata is a terrific steward of the brand. They have left the management in tact, put a board in place and let them get on with the job. If the brand gets screwed up, it won’t be Tata who screws it up, it will be us”.
“Ratan Tata is a very impressive guy. He is on the board of 92 companies. Tata has a huge philanthropic side. Most of the shares are actually owned by charitable trusts. So they have a social responsibility more than any company I have ever seen. And Ratan is partly the driver of that. He has achieved an awful lot in business, he is extremely intelligent. The guy has a real touch with people.
Ratan Tata suggested recently to the Financial Times that his company would be a better fit than Ford, claiming that people’s concerns about his company damaging the reputation of JLR, come from assuming that the Indian carmaker will interfere with future production.
“A lot of people have been making an issue of whether a car manufacturer that’s in the low end can also integrate with an upper-end luxury car enterprise . . . that assumes one is going to integrate the enterprise.” said Mr Tata.
“If you take Unilever, it may make a soap in Africa for the masses and may make a high-class cosmetic product in the UK and that high-end cosmetic product has its own brand equity . . . Unilever is able to handle both ends of the spectrum.”
Signing the deal seems to be a formality at this stage as Ford and Tata go into more extensive talks.
