Ford Motor Co. is selling its storied Jaguar and Land Rover businesses to India’s Tata Motors Ltd. in a deal that will net the U.S. automaker $1.7 billion Ã¢â‚¬â€ roughly a third of the price it paid for the two luxury brands.
The deal announced Wednesday will expand the Indian carmaker’s reach around the globe and give Jaguar and Land Rover badly needed capital to update and expand their product lines.
The sale had been in the works for months as cash-strapped Ford sought money to fund its turnaround plan.
Tata will pay $2.3 billion for the British brands, but Ford will pay about $600 million into the Jaguar-Land Rover pension fund when the deal closes, Tata’s statement said.
Ford bought Jaguar for $2.5 billion in 1989 and Land Rover for $2.7 billion in 2000. But the Dearborn-based automaker has been struggling and wants to focus on its main brands.
Selling the companies at such a loss clearly shows buying them was a mistake for Ford, said Erich Merkle, vice president of auto industry forecasting for the consulting company IRN Inc. in Grand Rapids.
Jaguar never has made a profit under Ford, Merkle said.
“People seem to be generally happy about the buyout. Tata has a reputation as a business which is going places and has ambition to be a major market force,” said Lee Betteridge, a 34-year-old Jaguar toolmaker.
“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.”
Mulally has said Ford would invest the proceeds from the sale in quality and product development.