DETROIT – After spending billions of dollars on Jaguar and Land Rover, Ford Motor Co. gave up on the storied British automakers Wednesday and unloaded them to India’s Tata Motors Ltd. for a mere third of the original purchase price.
Ford’s fortunes have changed, with slumping U.S. sales and billions in losses. The fire-sale price comes as the Dearborn, Mich.-based automaker concentrates on its main brands.
“You have to cut your losses at some point,” said Erich Merkle, vice president of auto industry forecasting for the consulting firm IRN Inc. in Grand Rapids. “It’s been draining them of cash and resources.”
Tata is India’s oldest and largest conglomerate, with holdings in steel, information technology and autos. It should have the cash to save Jaguar and Land Rover and develop new products to better compete with luxury automakers, Merkle said.
Ford had hoped to turn Jaguar, which was founded in 1922, into a high-volume brand that could compete with BMW and Mercedes-Benz. But its entry-level X-Type sedan, introduced in 2001 to lure younger buyers, sold poorly and was criticized for conservative styling. Jaguar’s U.S. sales were down 24 percent last year.
Land Rover, founded in 1948 — the year after India gained its independence from Britain — has fared better thanks to popular products such as the Range Rover Sport and LR2. U.S. sales rose 4 percent last year.
But unlike Jaguar, which has improved its quality rankings under Ford, Land Rover placed last in J.D. Power and Associates’ rankings of initial quality and dependability in 2007.
Ramakrishnan acknowledged Jaguar’s financial difficulties but said the brand is turning around, and he expects it to be profitable within two years.
“Land Rover is a highly profitable company … and Jaguar is well on its way,” he said in a conference call with reporters.
Ramakrishnan said the brands’ existing management will continue.
Ford, which lost $12.6 billion in 2006 and $2.7 billion last year, has been looking to sell the brands for months. It has mortgaged assets to keep operating and expects to burn up $12 billion to $14 billion until 2009, when it plans to become profitable again.
Ford shares fell 13 cents to $5.87 Wednesday. They have traded in a 52-week range of $4.95 to $9.70.