DETROIT — After spending billions of dollars on Jaguar and Land Rover, Ford Motor Co. gave up on the storied British automakers Wednesday and unloaded them to India’s Tata Motors Ltd. for a mere third of the original purchase price.
The deal is another sign of India’s growing economic muscle and something of an economic role reversal, with two icons of British industrial might expanding the global reach of a premier conglomerate in the ex-British colony.
Ford nets about $1.7 billion, a far cry from what it paid for the properties — $2.5 billion for Jaguar in 1989 and $2.7 billion for Land Rover in 2000. Counting losses and product development, analysts figure Ford spent more than $10 billion on the brands.
Those acquisitions, like General Motors’ purchase of Saab and Chrysler’s entanglement with Mitsubishi, came when cash was rolling in at the U.S. automakers as drivers snapped up cars and pricey pickups and sport utility vehicles.
But Ford’s fortunes have changed, with slumping U.S. sales and billions in losses. The fire-sale price comes as the Dearborn, Mich.-based automaker concentrates on its main brands.
“You have to cut your losses at some point,” said Erich Merkle, vice president of auto-industry forecasting for the consulting firm IRN Inc. in Grand Rapids. “It’s been draining them of cash and resources.”
Tata is India’s oldest and largest conglomerate, with holdings in steel, information technology and cars. It should have the cash to save Jaguar and Land Rover and develop new products to better compete with luxury automakers, Merkle said.
The proceeds of the deal aren’t enough to rescue Ford’s finances, but the sale will allow the company to focus on restructuring its core brands, Merkle said. Ford does not break out financial results for its individual brands, but Merkle said Jaguar never made a profit in the nine years Ford had owned it.
“They were a long time coming to the realization that this thing wasn’t working,” Burnham Securities analyst David Healy said.
Tata said Ford will continue to supply engines, transmissions and other components for five to nine years.
