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What Led To FORD Selling Off JLR?

Ford bought Jaguar and Land Rover in the late 1980s and 2000 respectively, but as luxury car sales declined in the 1990s amid toughening market conditions, both brands struggled. Ford later established a Premier Automotive Group including the two brands and others, but dismantled it in 2006 and started selling the brands. Jaguar Land Rover was next in line and Ford showed intentions to sell, leading to Tata Motors acquiring them in 2008 to diversify its product range and gain access to new technology and markets, but sluggish global sales, including during the COVID-19 pandemic, have resulted in mounting losses for both JLR and Tata in recent years.

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59 views

What Led To FORD Selling Off JLR?

Ford bought Jaguar and Land Rover in the late 1980s and 2000 respectively, but as luxury car sales declined in the 1990s amid toughening market conditions, both brands struggled. Ford later established a Premier Automotive Group including the two brands and others, but dismantled it in 2006 and started selling the brands. Jaguar Land Rover was next in line and Ford showed intentions to sell, leading to Tata Motors acquiring them in 2008 to diversify its product range and gain access to new technology and markets, but sluggish global sales, including during the COVID-19 pandemic, have resulted in mounting losses for both JLR and Tata in recent years.

Uploaded by

Nitish Mishra
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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What led to FORD selling off JLR?

Ford bought Jaguar from British Leyland Ltd. in 1989 for USD 2.5 billion and Land Rover for
USD 2.7 billion in May 2000. As market conditions toughened in the 90s and people stopped
buying luxury cars, they went through a rough phase. However, in 1999, Ford established a
PAG (Premier Automotive Group) which included Jaguar, Aston Martin and Lincoln. Volvo
soon entered this PAG. But they had to dismantle the PAG in 2006 and sell Aston Martin for
USD 931 million. JLR was next in the line and they showed all their intentions to put JLR on
the market.

Benefits to TATA
1. Less dependency on the Indian Market and an increased share in the Global Market.
2. Their range diversifying from India’s cheapest car to luxury brands.
3. Access to latest technology which came along with JLR.
4. Cost Competitive Advantage as Corus supplied steel to JLR as TATA had already clocked a
deal with them.

5. Current situation
6. Initially JLR has performed strongly after the merger and was slowly and steadily
repaying TATA’s immense faith in its name and reputation.
7.
8. On June 15, 2020 JLR reported a drop in its sale figure for fourth quarter and financial
year ended March 31st, 2020 due to corona virus pandemic. The luxury carmaker said the
pandemic "significantly impacted" its projections for 2019-20, with fourth quarter retail
sales down 30.9 per cent and full year sale lower 12.1 percent. Since year 2014-15, JLR is
facing problems and its sales is reducing throughout the globe.
9. Tata Motors suffered consolidated fourth quarter net loss of 98.94 billion rupees, as
coronavirus lockdown across its markets weakened sales, including at JLR. Its total sales of
passenger vehicles for financial year 2019-20 is 38% less than financial year 2018-19 and
total sales of commercial vehicles is 34% less in comparison to financial year 2018-19. Tata
Motors’ losses mount, with sluggish sales in China and Brexit adding to its woes.
10. Tata Motors is reviewing all its businesses, revising its investments and working capital
and the company has also launched inventory correction programme. During the time of
corona virus pandemic, company has laid off 1100 employees as it is focusing on cost
cutting. JLR deal is not proving to be very good for the company in year 2020. JLR is like
two-edged sword for Tata Motors. If JLR performs well, Tata Motors earn its profit nearer to
80% from JLR. When JLR doesn’t perform well, in that situation most of the loss of Tata
Motors is from JLR.
11. In the past, the company has launched few vehicles, but they did not perform well. Due to
this Tata Motor’s survival is getting difficult. The company is struggling for profits in the last
few years, in fact the company suffered huge losses of 28,826 crores in year 2019. Apart
from losses, the company has taken huge debt nearing one lakh crore. The situation of the
company is grim in 2020.

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