Last Resort Posted March 26, 2008 Share Posted March 26, 2008 March 26 (Bloomberg) -- Ford Motor Co., the world's third- largest automaker, will sell Jaguar and Land Rover to Tata Motors Ltd. for at least $2 billion as demand for the luxury vehicles falls at the fastest pace in at least three years. Jaguar sales dropped 33 percent in the U.S. and Europe in the first two months of the year. Land Rover sales fell 13 percent in the U.S. and 7.7 percent in Europe during the period. The purchase by Tata Motors, India's largest truckmaker, will be announced today, a person familiar with the transaction said. Ford, based in Dearborn, Michigan, is ending its 21-year investment as the U.S. housing slump and job losses curb demand for the $80,000 Jaguar XK and the $93,000 Range Rover. ``These are vanity products and probably these brands will have a tough time in a weak economy,'' said Edwin Merner, who oversees $2 billion as president of Atlantis Investment Research Corp. in Tokyo. Mumbai-based Tata Motors ``will have trouble doing well in this sort of environment,'' he said. Wall Street banks have eliminated 34,000 jobs in the past nine months in the wake of the collapse of the subprime mortgage market. U.S. sales of luxury cars made by Jaguar, Bayerische Motoren Werke AG, Porsche SE and Audi AG have fallen this year. `Major Challenge' Ford, which lost $15.3 billion in the past two years, bought Jaguar in 1989 for $2.5 billion and Land Rover in 2000 for $2.73 billion. Ford doesn't disclose financial figures for Jaguar and Land Rover, whose biggest markets are the U.K. and the U.S. Jaguar is unprofitable, according to analysts. ``Turning around Jaguar will be a major challenge,'' said Ashvin Chotai, a London-based independent Asian automobile analyst. ``Tata will need to tread carefully and ensure there is no negative impact on these brands.'' Tata has obtained $3 billion of loans to use for the purchase, and Ford will contribute $600 million to pensions for Jaguar and Land Rover workers, people familiar with the transaction said yesterday. ``We've made significant progress,'' Ford spokesman Mark Truby said in an interview yesterday. ``There are no major roadblocks.'' He declined to give details. ``We're in discussions,'' Debasis Ray, a Mumbai-based spokesman for Tata Motors said yesterday. Ford rose 4 cents to $6 in New York Stock Exchange composite trading yesterday. Tata Motors fell as much as 4.2 percent today to 651.1 rupees in Mumbai trading today. It changed hands at 660.95 rupees at 12:55 p.m. local time. The stock has fallen 17 percent since Ford named Tata on Jan. 3 as the preferred bidder for Jaguar and Land Rover. Overseas Network The purchase would give Tata brands with histories dating back to Britain's colonial era. Tata would also gain an overseas sales network after only 10 years making cars. Parent company Tata Group, which also owns units making tea, software and salt, is steering acquisitions by Indian corporations abroad. The group, led by Ratan Tata, bought steelmaker Corus Group Plc for $12.9 billion last year in the biggest-ever purchase by an Indian company. The Tata Motors division signed agreements in 2003 to buy the Daewoo Commercial Vehicle Co. for $102 million, its first overseas acquisition. Quote Link to comment Share on other sites More sharing options...
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