Steane Klose | Mar 31, 2008

Ford Motor Company made the long awaited announcement last Wednesday that it has entered into a definitive agreement to sell its Jaguar Land Rover operations to Tata Motors.

The transaction is the culmination of Ford's decision last August to explore strategic options for the Jaguar Land Rover business, as the company accelerates its focus on its core Ford brand and "One Ford" global transformation. The sale will leave Volvo as the sole surviving member of Ford’s Premium Automotive Group (PAG), following the sales of JLR and Aston Martin back in 2007.

The sale is expected to close by the end of the next quarter and is subject to customary closing conditions, including receipt of applicable regulatory approvals.

The total amount to be paid in cash by Tata Motors for Jaguar Land Rover upon closing will be approximately US $2.3billion. At closing, Ford will then contribute up to approximately US $600 million to the Jaguar Land Rover pension plans.

"Jaguar and Land Rover are terrific brands. We are confident that they are leaving our fold with the products, plan and team to continue to thrive under Tata's stewardship. Now, it is time for Ford to concentrate on integrating the Ford brand globally, as we implement our plan to create a strong Ford Motor Company that delivers profitable growth for all," said Alan Mulally, president and CEO, Ford Motor Company.

As part of the transaction, Ford will continue to supply Jaguar Land Rover for differing periods with powertrains, stampings and other vehicle components, in addition to a variety of technologies, such as environmental and platform technologies. Ford also has committed to provide engineering support, including research and development, plus information technology, accounting and other services.

In addition, Ford Motor Credit Company will provide financing for Jaguar and Land Rover dealers and customers during a transitional period, which can vary by market, of up to 12 months.

It would appear that Tata intend to nurture the two brands having respect for their history and heritage.

"We are very pleased at the prospect of Jaguar Land Rover being a significant part of our automotive business. We have enormous respect for the two brands and will endeavour to preserve and build on their heritage and competitiveness, keeping their identities intact. We aim to support their growth, while holding true to our principles of allowing the management and employees to bring their experience and expertise to bear on the growth of the business," said Mr. Ratan N. Tata, Chairman of Tata Sons and Tata Motors.

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