Ford Vehicle

F ord bought a struggling Jaguar in 1989 for over $2.5 billion. It bought the more successful Rover in 2000 for a little more than that. After that combined investment of over $5 billion, and having sunk another $10 billion into Jaguar over the years, Ford is now happy to sell both to the Tata group for barely $2 billion - with perhaps more bills to come since there is a billion-sized hole in the pension account. The two brands together barely break even.

Both are part of Ford’s premier auto division, which sold a third brand (Aston Martin) earlier in the year, leaving just Volvo behind. Rover is profitable, but Jaguar reportedly lost over $700 million in 2006 and perhaps over $550 million in 2007; it is expected to lose $300 million more in 2008.

Rover sells close to 200,000 vehicles a year, but Jaguar sales have been falling quite sharply in its main market, the United States.”Ford’s strategy of using Ford platforms to build more volume-market Jaguars failed, and the focus now is back on selling luxury cars that score on styling, status and technology. That potted history should underline the risks involved in Tata Motors [ Get Quote ] taking charge of two of the car world’s most iconic brands.

Ford paid what many thought even then was a vanity price, and has lived to regret it. It failed to get its business strategy right, and could not find a way to cross-fertilise Ford and its premium British brands. Tata essentially has one basic car model with variants, and one off-roader, and it is developing an even more basic model (it also makes trucks, of course). What possibly can be the fit with Rover and Jaguar? Perhaps no fit will be sought, and they will run as independent businesses.