Tata + JLR = More Profits For Ford?
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!
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.
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...
Engine foundries in China = "chunky-style" water in the Yangtze River.
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...