Stand by Your Brands: Tata Motors Says It's Keeping JLR Around
Following a failed bid to secure a helping hand from the UK government, rumors arose that Jaguar Land Rover owner Tata Group was considering selling its controlling stake in the British automaker.
The so-called rescue package didn’t see the light of day because the government felt Tata wasn’t exactly in dire financial straits. If it wanted to rustle up some dough, it would have to look elsewhere. On Monday, Tata made it clear: Jaguar Land Rover will not become an orphan again.
As reported by The Guardian, both JLR and Tata Steel, both grouped under the Tata corporate umbrella (and the latter the operator of a huge Welsh steel facility), sought out government funds before being rejected by Her Majesty’s Treasury on the basis of their parent’s fiscal health.
“Unconfirmed and unsubstantiated reports have been published by some media alleging that Tata Motors may sell [its] stake in Jaguar Land Rover,” the company said in a statement. “Tata Motors categorically denies and dismisses any such intent. Jaguar Land Rover is and remains a key pillar of Tata Motors and the wider Tata Group.”
JLR lost nearly 1 billion pounds ($1.3 billion) in the first half of the year, but Tata characterizes its fiscal situation as stable. It wasn’t the only automaker to suffer from the arrival of the coronavirus pandemic; ahead of that arrival, too, the automaker had made headway in improving its profitability following an ultimatum from its parent. The pandemic means JLR’s recovery plan will have to cut deeper.
Come next month, the automaker will have a new boss in the form of former Renault top dog Thierry Bolloré.
Had JLR secured a financial lifeline from the UK, it wouldn’t have come free of strings. The government would have demanded the automaker expedite its electric vehicle program and the phase out of polluting diesel powerplants from its lineup.
[Image: Jaguar Land Rover]
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No one wants the crown jewels of British Empire? USA -check, India - check, who is the next in the line? Australia, NZ, SA, Canada, Ireland? The funny thing would be the French takeover of the Jewels.
Personally speaking I think Tata have done well with JLR. However with a shrinking sedan market, autonomous cars, electrification, etc I can’t help but think that JLR need a much bigger parent to help spread some of the investment costs. If you look at Land Rover then with the exception of the Discovery, every model sells well for high profit margins. Jaguars SUVs are doing OK, as is the F Type but Sedan are the problem. Fundamentals are good but headwinds are the issue. Personally speaking I think a deal with one of the Japanese makers would work best for JLR. A company like Toyota would be a great fit and would have the headroom to give them the focus needed over a number of years.