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Ford says TATA to Jaguar and Range Rover

Editorial Staff

It is expected that Ford, which had already said that Tata of India was its preferred bidder, will shortly announce that Jaguar and Range Rover will be sold to TATA for USD2 milliard.

But there is something that might cause a problem - when BMW sold Range Rover, it retained the power of first refusal over the name Rover. That's why MG Rover was not able to sell the brand to the Chinese companies that took over that company. Whether the brand goes with the company in the TATA deal is therefore not a foregone conclusion.

But the apparently cheap price underlines that the plant and brand plus the designs and the really rather nice current Jaguar range plus some great improvements in Land Rovers, in particular, have not translated into anything approaching profit.

There is an argument that Ford has sold the family jewels to keep its bread and butter customers happy. At Aston Martin, Jaguar and Land Rover Ford has invested heavily and that investment has paid off in the best range of cars the three brands have had for years. Sure, there have been some reliability problems but to put those in perspective, Mercedes' US reputation has fallen hugely as a result of similar difficulties leading to the JD Power survey putting a raft of Oriental brands ahead of the supposedly premium German make. In the case of Mercedes, it did the opposite of what Ford has done: it dumped its low-end business. Ford, as the traditional king of the mass market has decided to focus on its historical strengths and disposed of its best cars.

For Ford, its desire to be the king of the road in all classes started to fall apart several years ago. It bought Cosworth so it could make racing engines. It bought a Formula One team and branded it Jaguar. Under a muddled Ford leadership, neither flourished, to say the least. Ford made an ignominious exit from F1, and sold Cosworth.

Ford had stuffed up big time as soon as it bought Jaguar. In an attempt to shore up its fading Lincoln range, it tried to turn them into Jaguars - but instead turned Jaguars into Lincolns. With the areas of obvious differentiation being eroded, the people who bought the British cars in the US were those who wanted to show off.

And in the Chelsea Tractor market, Ford began making look-alikes for Land Rovers - whilst almost abandoning Land Rover's traditional military and agricultural markets to other brands, despite a frantic rear-guard action by Land Rover's sales team both in the UK and, especially, overseas.

TATA has, one suspects, seen something Ford did not. There is a residual love for Land Rovers that look like Land Rovers. They sit in their dozens, old but pending re-use, alongside roads all over Africa. There are 30 year old examples still running about in the bush.

Ford, tried to be too clever, tried to standardise too much, tried to stamp Ford on brands that were absolutely not Ford and by the time it noticed its mistake, the sales figures told a story of decline.

The huge irony of this story is that the loss of Jaguar and Land Rover to an Indian company and of MG Rover to a pair of Chinese companies that the Chinese government has now ordered to work together instead of squabbling is that the cars both were making before disposal were both good and desirable - and far from being a basket case, the companies had both made the necessary large investments and were poised to move back into the market with the cars that would have brought their customers back.

So whilst TATA will have to spend money to support the factories for the next couple of years, they have bought the plant and cars just as they are on the edge of success. And unlike MG Rover, the TATA purchases are going concerns. So no need to ship the plant half-way across the world, no need to mothball the plant.

In fact, it seems that Tata might just have got itself a bit of a bargain.