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Jaguar, Land Rover news - The great British takeaway?

So, after a year of uncertainty, Jaguar
and Land Rover have been offloaded by Ford. Tata has just agreed to pay about
£1.5 billion for the two brands.

Ford will continue to supply engines,
transmissions and a host of other components, at least for the foreseeable
future. So for the moment you won’t notice any change. Same cars, same

Jaguar and Land Rover have always made a
fuss about being British. Even when they were both owned by Ford of the USA.
Or, before that, when Land Rover was owned by BMW of Germany. So it shouldn’t
be all that hard to accept that they’re now owned by Tata of India.

Tata has said it will leave the British
management to get on with it. ‘We are neither interventionist nor
integrationist,’ they say. Translation: we won’t meddle, and we won’t slap a
Jaguar grille on a Tata Nano.

Right now, the issue isn’t Jaguar-Land
Rover becoming too Indian. The issue is, how well can JLR do as an independent
car company?

Tata is very rich, a conglomerate that
turns over some £15 billion a year and, in Britain, owns Corus (formerly
British steel) and Tetley Tea and some very swanky London hotels. It also has
Tata Motors, the company that recently hit the headlines for launching the
Nano, the world’s cheapest car. It’s also India’s biggest truck maker.

But let’s face it these are hardly huge
synergies. There’s not a whole lot in common between a Nano and a
long-wheelbase Jag XJR. Nor between a basic Indian pickup and a Range Rover. So
you can’t say JLR will be part of a global car company. You have to look at JLR
as an Indian-owned British independent.

But Tata has said it will invest.
Investment is what it takes: not the £1.5 billion to buy the companies, but the
billions after that to fund new-car development and keep the factories up to

That near-insatiable appetite for ongoing
investment was just what scared Ford into selling. Any available cash Ford had
was desperately needed to develop new Ford cars in the USA, where they’re deep
in the cack.

JLR faces difficulties because it’s a
small car company. How small?

Between them Jaguar and Land Rover’s total
output is a third of Mercedes’ or BMW’s.

That means when they need to develop
bruisingly expensive new technology (and they need green technology badly), the
cost can’t be spread over so many cars. And JLR can’t do the same kind of
bulk-buying of components as the Germans do. It’s boring, but that sort of
thing does matter for the financial health of any car company.

But there’s something far more important
for their health than that. Making cars that people want to buy, so that the
factories work flat-out.

To do this Jag needs to get a beautiful
new XJ that people actually recognise as a modern car, rather than the present
XJ, which is modern but doesn’t look it. And that vital new XJ is planned for
launch in three years - Tata is promising the money.

And Land Rover can keep the showrooms -
and the Halewood factory - busy by launching an extra model. That’s the
production version of the LRX show car. Again, Tata’s billions will fund it.

So if Tata sticks to its word - and it has
a habit of doing just that - the change of ownership should mean stability,
rather than turmoil. At least for the foreseeable.

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