Tata Motors of India, a subsidiary of Tata Group, acquired the British luxury brands Jaguar and Land Rover from Ford Motor Company in 2008 for $2.3 billion. The acquisition was structured such that Ford was required to make a $600 million payment into the Jaguar-Land Rover pension fund. Thus, Tata paid only $1.7 billion for the two brands. Ford, which had acquired Jaguar-Land Rover in the 1990s for a whopping $5.3 billion, was forced to sell the two European luxury brands at a huge loss because it needed funding for its own survival during the financial crisis.
Since then, Tata has been able to revive the two brands and increase global sales. Few expected Tata Motor Company with limited experience in manufacturing trucks and inexpensive cars in India to successfully run a troubled Western luxury company. According to analysts, Tata’s success is attributable in large part to its management style. It did not seek to run Jaguar-Land Rover from its headquarters in India, instead, it left the day-to-day operations in the hands of U.K. executives.
The Indo-British manufacturer now wants to leave its own ‘tread’-mark in the fertile and coveted U.S. luxury car market. The U.S. sales of Land Rover have been accelerating this year emulating the triumphs of the unstoppable Lewis Hamilton, the acclaimed F-1 driver from U.K. In the first eight months of this year, Land Rover sales have grown by 20%. The company has ambitious U.S. growth plans for the Jaguar brand. The redesigned and much-anticipated Jaguar F-Type roadster is expected to add to U.S. sales. This month, Jaguar unveils its first sport utility vehicle “F-Pace” at the Frankfurt Auto Show, which might capture the American imagination. Jaguar is also launching the “XE” compact sedan next year priced under $35,000, which will compete with Audi A4, Mercedes C class, and BMW 3 series.
Ratan Tata, the retired chairman of the Tata conglomerate, who was instrumental in the acquisition from Ford, has been credited for the success of the two European luxury brands. As a fitting tribute, Mr. Tata was inducted into the “Automotive Hall of Fame” in Detroit in July this year. Step aside US, German and Japanese car manufacturers, we have a new American Idol.
Rich Anecdotal History
The Tata family, which owns and controls Tata Group, has been credited for fueling and championing much of India’s industrial revolution since its independence in 1947. The Tatas belong to the “Parsi-Zoroastrian” community. The word “Parsi” in Persian language means Persian. The Parsis originally migrated from Iran (then Persia) to India sometime during the 8th-10th century to avoid the persecution of Zoroastrians by Muslim invaders who were in the process of conquering Iran. To preserve their identity, culture, and heritage, the Parsis chose to flee Iran and migrate to India. Human migration in the face of adversity, labelled as “refugees” today, has deep roots in history. History also teaches us, as in the case of Tatas, that the winner is almost always the host country that provides shelter to the displaced.