DEARBORN -- Ford Motor Company has signed a "definitive agreement" to sell Jaguar and Land Rover to Tata Motors for approximately U.S.$2.3 billion in cash. Ford will contribute up to $600 million to Jaguar Land Rover pension plans and will continue to supply the British brands "for differing periods, powertrains, stampings, and other vehicle components, in addition to a variety of technologies, such as environmental and platform technologies."
Ford also will supply Tata's new acquisitions with engineering support, including research and development, plus information technology, accounting and other services. Ford says in its announcement of the sale that it will provide financing for Jaguar and Land Rover dealers and customers during a transitional period of up to 12 months, depending on the market. It will support Jaguar and Land Rover product plans, while supporting the two brands' move toward stand-alone capabilities. It's not a bad deal for Ford, which will makes some money selling components to Tata for Jag/LR. Reports say Ford will use the $2.3 billion to improve quality. That kind of cash could also help Ford develop its next-generation rear-drive platform, whether in the United States or Australia. Ford anticipates no significant changes to Jaguar and Land Rover employees' terms of employment. So far, it looks like no British factories will be closed in favor of production in India.
As I've written in the past, you can call this Gandhi's revenge. It's an ironic twist on the British Empire's running of India. There's little doubt Tata Motors, the company that just unveiled its $2500 Nano car for its native India, will do as well or better than Ford in running the two storied and troublesome brands. What's more, it gives Tata credibility in Western markets, as it undoubtedly ponders competing with other emerging automakers, especially those from China. "We have enormous respect for the two brands and will endeavor to preserve and build on their heritage and competitiveness, keeping their identities intact," said Ratan N. Tata, chairman of Tata Sons and Tata Motors.