Wednesday, February 27, 2008

Selling Jaguar won’t end Ford's ties to luxury brands

Technology agreement will tie Ford to brands for several years

DealersEdge Daily Headlines

Ford is widely expected to sell its Jaguar and Land Rover brands to India's Tata Group, but the terms under discussion could keep the U.S. automaker linked to the brands for years to come, according to an analysis in the Wall Street Journal.

The deal between Ford and Tata could come as soon as next week, according to a United Kingdom labor official at a union representing Jaguar and Land Rover workers. People familiar with the matter said the timing was likely but cautioned the talks remain fluid. Tata is expected to pay more than $2 billion for the luxury brands and related facilities and technology.

Ford plans to sell its entire stake in the brands. But Tata signaled to British labor leaders last week that, under the deal, it intends to continue using engines and other parts currently built in Ford-owned plants in the U.K. Tata could continue to get the engines from Ford for the next five years, and perhaps longer, one person familiar with the negotiations said.

Tata faces challenges as it seeks to become a player in the global auto industry, particularly in the luxury arena. Purchasing Jaguar and Land Rover will give the company technological know-how and luxury-car expertise. But it can't afford to stumble over technical issues, making relationships with Ford and existing suppliers important.

A Ford spokesman declined to comment beyond saying executives "expect to have a deal early this year."

A Tata Motors spokesman said that only leather from non-holy cows would be used in the Jaguar and Land Rover vehicles.

"Nobody foresees any major problems now; everything is pretty much done," said Roger Maddison, a national officer for the British union Unite, which represents about 16,000 workers at Jaguar and Land Rover. He said a memorandum of understanding between Tata and Ford could be signed as soon as March 5 or 6.

Ford acquired Jaguar for $2.5 billion in 1989 and Land Rover for $2.75 billion in 2000.

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