How Ratan Tata took revenge on Ford by buying out JLR

[GrandMasterSaxy]

"You do not know anything, why did you start the passenger car division at all?" - A question from Ford officials that sparked angst inside of Ratan Tata, an angst that was followed by an acquisition 9 years later that humbled one of the world’s biggest automotive conglomerates. Back in 1999, Tata Motors were having trouble shifting units of the home grown Indica hatchback, which was launched in 1998. Seeking help, Ratan Tata, with his team in tow, traveled to Detroit to sell off their fledgling passenger car business to Ford, who had feigned interest. However, the 3 hour meeting with top Ford executives didn’t go too well, and the team had to put up with a lot of ‘humiliation’, as recalled by Mr. Pravin Kadle, who was part of the team at that time and now heads Tata Capital. The Ford executives even went on to say that they would be doing Tata Motors a favor by buying their passenger car division. Ratan Tata, understandably disgraced, left the room without finalizing the deal, and flew back to New York with his team that very evening, before flying back to India. Throughout the 90 minute flight to NY, Ratan Tata, then the group chairman, was visibly somber, recollects Mr. Kadle in a speech after receiving the YB Chavan National Award 2014 on behalf of Mr. Tata, who is now Chairman Emeritus of the over $100-billion group. Nine years after the ‘humiliating’ meeting, life turned a full circle in 2008, and Ford, reeling in bankruptcy due to the global meltdown, had to let go of their cherished, iconic Jaguar and Land-Rover brands for $2.3 billion to Tata Motors. A wave of sweet revenge wafted in the air, when Ford chairman Bill Ford, post the acquisition, thanked Tata, saying ‘you are doing us a big favor by buying JLR’. Today Jaguar Land Rover, after making a dramatic turnaround, is the mainstay of Tata Motors’ finances, apart from its traditionally successful commercial vehicle division. http://www.motoroids.com/news/must-read-how-ratan-tata-took-revenge-on-ford-by-buying-out-jlr/

[amiret]

JLR is doing well , but Tata Motors standalone is incurring Losses. Last Quarter they reported a loss of over 2000 crores. There have been many calls from analysts to shut down their domestic passenger cars division and to focus on JLR and commercial vehicles. JLR was a great buy for Tata Motors.

[Temujin Khaghan]

had an american/german/japanese industrialist was insulted this way, he would have set up some solid r&d and brought out a new car which sets standards on global scale. not buy something which has been developed my someone else and established as a legendary brand. difference b/w a rich kid working hard on his studies and setting up a lab on his own and then bringing out some new invention and another rich kid providing capital and money to someone else's invention...

[Temujin Khaghan]

there was an excellent line in the hindu paper some time back where they wrote how all our billionaires are people who are either in FMCG or selling raw material from India. Where as the billionaires in USA and Japan are into technology development even our narayanamurthy and azizpremji supply IT services to other companies. not exactly apple, samsung or Microsoft or someother global technology brand

[Sachin=GOD]

had an american/german/japanese industrialist was insulted this way, he would have set up some solid r&d and brought out a new car which sets standards on global scale. not buy something which has been developed my someone else and established as a legendary brand. difference b/w a rich kid working hard on his studies and setting up a lab on his own and then bringing out some new invention and another rich kid providing capital and money to someone else's invention...

He didn't just throw money at Ford to buy JLR. The companies have seen a spectacular turnaround after Tata bought them - they had losses of £376 million in 2008......and now the profits for 2013/14 were £2.5 billion. However, none of things done in JLR seem to have been learned by Tata Motors domestically.

[G_B_]

JLR is doing well ' date='[b'] but Tata Motors standalone is incurring Losses. Last Quarter they reported a loss of over 2000 crores. There have been many calls from analysts to shut down their domestic passenger cars division and to focus on JLR and commercial vehicles. JLR was a great buy for Tata Motors.

too much of an ego... However i dont agree with shutting up shop. A lot of the JLR tech will find itself back to TATA motors (the core company)

[zen]

M&A is extremely tricky so smart businesses are not going to decide based on "revenge" factor. It would not be the first time that Tata Group would have to go through such negative experiences at global level. There could have been three possible objectives to acquire JLR - a) Increase market access, b) Pre-empt the competition, and c) Incorporate synergies Jaguar and Land Rover as premium brands are not doing as well as compared to the German and Japanese premium brands. That's one of the reasons why Ford sold it. Ford also owned the Volvo Car brand (not trucks) which it sold to Geely of China. Tata Motors took a calculated risk and credit to the company for turning around JLR. The new Range Rover is :woot:

[bulbul]

Jaguar and Land Rover as premium brands are not doing as well as compared to the German and Japanese premium brands. That's one of the reasons why Ford sold it. Ford also owned the Volvo Car brand (not trucks) which it sold to Geely of China. :

Ford wanted to concentrate on their core capabilities.They are the only car company didn't filed for Chapter 11 when GM & Chrysler did during 2008 recession.

[G_B_]

Ford wanted to concentrate on their core capabilities.They are the only car company didn't filed for Chapter 11 when GM & Chrysler did during 2008 recession.

you have to admit though, the once great Ford is now a shadow or itself. From number 2 to number 6/7 All JLR needed was to be backed with money and research. Tata have pumped in the money and JLR has found a major new market in China. Its well on course for 1 million car production by 2020. Regardless of what they felt about TATA you have to be respectful in the way you deal with people.