Automotive News - March 31, 2008 - (Page 3)

MARCH 31, 2008 • 3 C H A N G I N G O F T H E G U A R D AT J A G U A R A N D L A N D R O V E R comment Edward Lapham is executive editor of Automotive News. What’s ahead for British brands? Tip for Tata: Let British brands be British brands Edward Lapham It would have been interesting to see what former Ford CEO Jacques Nasser might have done with Jaguar and Land Rover if given another chance. But it’s probably just as well that Tata Motors outbid Nasser’s One Equity Partners and the other private equity groups being advised by former Jag/Ford execs Nick Scheele and Bob Dover. You don’t want to trust storied automotive brands to private equity philistines, even if they have car guys as advisers or partners. And let’s face it, all three may have preconceptions about the brands — or even attitudes about Ford — that could complicate the transition and re-establishment of the individual brand mission statements. For example, it would be wrong to think about using the brands to teach Ford a lesson by making the Jaguar XJ a really strong competitor for the Mercury Grand Marquis or making Land Rover just another Ford Explorer. Oh, wait. That was tried already, wasn’t it? No matter. Say what you will about Ford’s stewardship of the British brands, product quality is far better now than when Ford bought them. I once drove a preFord Jaguar XJ with faulty taillights. And it was brand new. (Of course, having owned and wrenched a couple of big Austin-Healeys and a Triumph TR6, I knew how to rewire the Lucas taillights so they would work.) That kind of problem just doesn’t happen anymore. No matter. I know, I know. Brand equity is another issue. The Jaguar X-Type — a Ford Mondeo dressed up in a Halloween costume of every imaginable Jaguar styling cue — did more to corrode brand equity than any malfunctioning taillight ever could. On balance, Ford’s experience with Jaguar, Land Rover, Aston Martin and Volvo — and General Motors’ experience with Saab — is proof of how difficult it is for a big company to assimilate a smaller, distinct brand without ruining it. That said, both Jaguar and Land Rover are leaving the Ford family well-positioned to succeed with good products landing in dealer showrooms and more in the pipeline. If Tata is smart, it will let the brands be themselves. You may e-mail Edward Lapham at elapham@crain.com. DAVID HALL Florida XK8 owner Tim Kip worries that Jaguar will lose some of its “Britishness” under the ownership of Indian automaker — and tea maker — Tata Motors. Concern confidence curiosity — welcome to America, Tata Richard Truett rtruett@crain.com What’s the deal? Highlights of Tata’s acquisition of Jaguar and Land Rover from Ford Tata pays Ford $2.33 billion for assets of Jaguar and Land Rover Deal closes around June 30, pending regulatory approvals After closing, Ford pays Tata additional $600 million for pension obligations Ford retains no ownership stake Most of the Jaguar-Land Rover management team, including CEO Geoff Polites, transfers to Tata Ford supplies Jaguar and Land Rover “for differing periods” with powertrains, certain parts and technologies Ford Motor Credit will continue providing new financing for Jaguar and Land Rover dealers and customers for up to 12 months No significant changes in employment terms for Jaguar and Land Rover employees; unions endorsed the deal Each day on his way to work, Tim Kip zips past the Tata Tea Inc. processing factory in Plant City, Fla., in his Jaguar XK8 sports car. Kip said he rarely if ever thought of Tata before last week. And if he did, it meant just one thing: tea bags. That changed when Ford Motor Co. sold Jaguar and Land Rover to Indian automaker Tata Motors Ltd. for $2.3 billion. Kip, owner of Family Estate Advisors, a financial planning company, says he is not happy that a company that makes tea now also holds the keys to his favorite brand of cars. “It’s tremendously disappointing,” says Kip. “Maybe it gives Jaguar the cash infusion it needs to maintain the company, but 50 percent of owning a Jaguar is the mystique. I don’t know if MORE ON JAG-LAND ROVER SALE Future could be bright for brands ➤ 39 Fuel economy fines loom for Tata ➤ 39 39 Land Rover faces challenges ➤ you can have that with an Indian owner. “I’m sure Tata makes fine tea, but any time you take away from the Britishness of Jaguar, you lose that personality.” Welcome to America, Tata. The purchase by the Tata conglomerate — maker of such diverse items as wristwatches and huge earth-moving equipment — is being viewed with curiosity on many fronts. Old-school Jaguar customers such as Kip worry that the brand’s rich heritage is in jeopardy. Dealers such as Mike Collier and Ken Gorin take the global view and say the change in ownership is no big deal. Others have adopted a waitand-see attitude. They all hope the ownership change will help revive Jaguar. Things never really got going under Ford, which acquired the legendary marque in 1989. Jaguar sales in the United States are in a tailspin, plunging from 61,204 in 2002 to 15,683 last year. In contrast, Land Rover sales nearly doubled after Ford acquired the automaker from BMW in 2000. Land Rover sold 49,550 vehicles last year, compared with 27,148 in 2000. ‘Who owns Harrods?’ The deal calls for Ford to continue providing financial services to Jaguar and Land Rover dealers and customers for the next year, including see TATA, Page 39 Expect most Ford-bred executives to stay put Mark Rechtin mrechtin@crain.com news ANALYSIS LOS ANGELES — You usually can count on some executive bloodletting when a company changes hands. But as Tata takes control of Jaguar and Land Rover, don’t look for much management disruption. Tata Motors Chairman Ratan Tata says the Indian company knows what it doesn’t know. And it sure doesn’t know the luxury-vehicle market or the European and American markets. Tata needs guidance, and that should be great relief to the managers at Jaguar and Land Rover. When BMW bought Land Rover in 1994, the German automaker seemingly moved half of Munich to the British Midlands, forcing out many longtime Land Rover sales and manufacturing managers. BMW was going to teach the Brits how to assemble a vehicle properly. Polites: Will stay as brands’ CEO O’Driscoll: Likely to remain at Jag The day after BMW sold Land Rover to Ford in 2000, the Germans packed up and left. Then Ford moved in its own cadre of execs, again at the expense of Land Rover lifers. Same thing happened when Ford took over Jaguar. But Tata likely will allow the existing executives, with rare exceptions, to stay on. Jaguar Land Rover CEO Geoff Polites will stay put. The Australian was once head of marketing for Ford of Europe and used to run Ford of Australia. Land Rover managing director Phil Popham and Jaguar Land Rover product development boss Al Kammerer have pledged to remain on the job. And it’s a fair bet that Jaguar managing director Mike O’Driscoll will keep his job. O’Driscoll is a native of Coventry, England, Jaguar’s hometown. He has spent most of his career with the British brand. “I think 99.9 percent of the people are going to want to stay on,” said Ian Callum, Jaguar chief designer, who will stick around. Of course, Ford Motor CEO Alan Mulally may want some franchise players to come back to Dearborn. They may be allowed to keep their Jaguar or Land Rover jobs for the ownership transition but then go back to Ford. That will be detailed in the fine print of the Tata deal. But given the scads of white-collar layoffs at Ford, don’t expect many openings to be created for Premier Automotive Group transplants. The relocation of Jaguar and Land Rover’s U.S. headquarters away from California may cause some disruption. Jaguar and Land Rover already have distribution and parts offices in New Jersey. Both brands likely will follow Volvo’s lead in vacating Ford’s PAG headquarters in Irvine and consolidating in New Jersey. That could happen this year or could drag out to next summer. Given the sour real estate market in Southern California, many employees might prefer to stay put — and find work elsewhere — rather than suffer a devastating investment loss on the sale of their home by moving East. c

Table of Contents Feed for the Digital Edition of Automotive News - March 31, 2008

Axle strike leads GM to alter production plan Industry expert Ferron joins Automotive News Group Hummer adds E85 models Lear expands in China Ford spills the beans on car seats Concern ... confidence ... curiosity — welcome to America, Tata Expect most Ford-bred executives to stay put Tip for Tata: Let British brands be British brands Dana CEO sees need for growth in Asia Chrysler: Any deal for partner would be done by Cerberus Farley retools Flex marketing strategy Malibu attracts import-minded buyers European purchasing execs to suppliers: Costs must fall Reynolds removes dealership modems New Saturn ads will promote Aura, Vue, Outlook This Spring Hill launch is a fraction of the first one GM works on small global car Hal Riney, Saturn campaign creator, dies Dealer sours on China importer Secret computer lets Nissan planner peek into future XM-Sirius merger: Lower prices, more choices? Key Chrysler product developer resigns Ford's new boss in HR plans no major changes Wagener to replace Pfeiffer as Mercedes design chief It's time to break the glass ceiling Autos don't cause all global warming Toyota plumbed the depths of Scion Customer loyalty is serious business Future bright for Tata brands Dauch sends wrong signals as Axle strike drags Yanase opened Japan to Western cars Fewer dealers, sure, but more brands What if Ahn falls short? Want to inspire Lori Queen? Just say no Hanwha to build GM Powertrain assembly line Toyota enters untapped Korea, home of Hyundai James O'Rourke Jr. Picture This -- March 31st, 2008 Lexus pays dealers for innovations Suppliers to the 2009 Dodge Journey Ricardo center has battery focus Howa USA opens interior parts plant in Kentucky N.Y. show suggests a future of smart powertrains, muscle BMW sees new models as sales saviors Ford contract has unique take on core jobs 6 more PACE-setters in auto innovation Buy-here, pay-here may grow Dealers Mercedes SL: A fresh face — with 1 flaw Ex-Chrysler design chief John Herlitz dead at 65 Future could be bright for Jag, Land Rover Land Rover in good shape, but challenges remain Fuel economy fines loom for Tata As segment shrinks, Chrysler minivan output takes a big dip Mercedes names 27 AMG dealers Continental to cut jobs Cobalt SS price: $22,995 Kia opens Ga. training center Nissan idles Mexico plant Plastech legal bill: $1 million for a month Magna will add 3 plants in Mexico El Camino diehards say Pontiac G8 should have been a Chevy No 2nd chance for Nasser, other Ford alums Buick grabs a name from the past After short list, a short stay for Laymon Lori Queen or Ellery Queen? Daimler's mum on BMW Southern supplier strategy Tracing the Camaro's bloodline Alfa searches for a U.S. factory

Automotive News - March 31, 2008

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