By on November 12, 2010

Recently, I wrote about how Tata is reaping huge profits thanks to the acquisition of the “toxic” JLR brands. It was a huge gamble to buy them, but it paid off. Literally. Well, it appears that Tata’s growing profits are going to benefit not only Tata, but ironically, Ford, as well.

Rediff reports Tata is asking Ford to build more engines, because JLR is flying high. Tata is building plants in China and India and those plants will need supplies of engines to keep product flowing.

C. Ramakrishnan, CFO for Tata Motors, said: “Currently, Ford is delivering more than what it had contracted for, but our need is even higher than that. We believe Ford has ramp-up plans to tackle the additional volumes.”

Currently, Tata has contracts with Ford to supply Tata with engines, but as Mr Ramakrishnan also said, that doesn’t stop them from looking elsewhere. “Our agreement with Ford doesn’t prevent us from doing that. We can look at the Tata Motors range, too” he said. Erm, calm down! It probably might be better to let JLR develop a range of their own! I can’t see a Jaguar XJ being powered by the powertrain of a Tata Nano. But, best of all, this could spell good news for the UK.

Ford’s Dagenham plant is a global hub of engine manufacture for Ford. Any increase in volume, will almost certainly result in bigger volumes (and, therefore, more exports) for the Essex based plant. Go globalization!

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9 Comments on “Tata + JLR = More Profits For Ford?...”


  • avatar
    Tstag

    TATA have said eleswhere that they intend to start switching away from Ford at the earliest opportunity. JLR and TATA are currently collaborating on 4 and 6 Cylinder engines as we speak. Ford’s profits will be short term, like it’s short term profit from the sale of the rapidly growing and profitable JLR.

  • avatar
    golden2husky

    I recall reading somewhere that when Ford bought Jaguar, they culled the best car off the line and did a full rundown on it and found that the defect rate of assembly was 10 times greater than a randomly pulled fourth gen Taurus.  Hence the billions that were dumped into these storied brands to make the quality of the product actually be competitive.  While some may have bemoaned the American ownership, the cars were far more reliable and better built.  I never got this deal…buy trouble brands, spend a fortune on them, neglect investment in your core brands in part because of it, improve them and then sell them.  I know Ford needed cash, but wasn’t the beg expense behind them?  Hopefully this will be the last of Ford’s big, bad, decisions…

    • 0 avatar
      amitishere

      It wasn’t about the money.  The primary goal was to focus on Ford’s core brands, i.e. Ford and Lincoln.  Everything else was a distraction.  Given Ford’s success over the past few years, it’s hard to argue with that logic.

    • 0 avatar
      Robert.Walter

      GM pursued a different vision, the kept dumping money into a far-flung portfolio, got it to the point of being competitive, then ran out of cash, colapsing the entire enterprise.  If FMC had held onto JLR and Mazda equity rather than divesting it, FMC would have been just that much closer to joining GM’s and Chrysler’s insolvency parade than they eveventually ended-up being.

  • avatar
    V572625694

    Engine foundries in China = “chunky-style” water in the Yangtze River.

  • avatar
    JJ

    They bought JLR at exactly the right time. Their product portfolio of was arguably better than ever, Ford needed to sell and as it turned out, the huge green lobby kinda faded again already (for now). Two or three years ago it was considered a crime in some parts to buy an RR, now it’s pretty much ok again.

    Also, their products age quite well, or at least the attributes that make their products desirable age quite well. For example, 3 years ago, when you would have forced me to buy an SUV at gunpoint, I would have gone and bought an X5 without doubt. Now, the X5’s seems kind of outdated (not to mention the ML and Q7…ugh!), but the RR Sport became relatively more appealing to me. Somehow, it doesn’t matter that much that the X5 is a technically superior car anymore, cause new technology has come along so it’s no longer cutting edge anyway, but at the same time, the sweet interior and classic styling of the RR is still there and even better since the facelift…

    • 0 avatar
      daga

      Bought at the right time??? Didn’t they agree to it before the lehman BK and right around the Bear Stearns crash? an for something north of 2b? It would have been hard to guess how bad it would get, but I think it’s safe to say that the price would have been substantially lower 1 year later.

    • 0 avatar
      JJ

      Meh…1 year later you would also be substantially closer to the point where Ford would have realised they might want to stick to JLR anyway if they couldn’t sell for a higher price. As some have mentioned above Ford sunk billions into JLR (they sunk 3bn 2002 Euros in acquiring Land Rover alone in ’02) trying to make it a true competitor in the luxury market, I’m sure that if some exec would have found some way to (financially) justify keeping JLR they would have done so.

      But my point focussed more on the image problem SUVs had at the time, also paired with oil prices being sky high (spiked May 08 at $140/barrel). It was hard to imagine anyone would ever be able to turn a profit with cars doing some 14mpg. I would argue that over the last two years the attitude against SUVs has mellowed considerably (along with oil prices decreasing due to the economic downturn), and TATA reaped the benefits.

    • 0 avatar

      You have to understand though that Ford’s position is purely one of creating best in class full lineup family of vehicles. Having R&D (granted, it could be argued they already spent that), plant capacity dedicated to JLR and $$ for Marketing would not have allowed Mulally’s vision of ONE Ford to take off. While people feel the sale of JLR might be short sighted, it truly isn’t as Ford is approaching the Toyota way of having a complete lineup of vehicles available (they’re better than Toyota currently in this regard if you ask me personally) within just the Ford Family of vehicles. They made the right decision for the betterment of all it’s shareholders, dealers, employees and most importantly, consumers. That’s my take.


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