AM Online

The Big Picture: Now the hard work starts

The long-running saga over Land Rover and Jaguar is finally over. Tata, known to be the suitor since before Christmas, has now got its hands on two slices of British automotive history after raising funds to support the knock-down £1.1bn price.

Now the hard work really starts. Jaguar has been in decline for decades; Ford threw millions of pounds at the business but badly miscalculated when it attempted to turn the brand into a volume seller. Buyers rejected the Mondeo-based X-Type.

Tata needs to focus on breadth of product, taking a leaf out of the premium German marques’ policies.

But investors are concerned about the deal – Tata’s share price is under pressure – with loss-making Jaguar the main worry.

But new product like the XF could be a vital fillip and Jaguar design bosses claim to have even better models in the pipeline. Tata has wisely committed to Jaguar and Land Rover’s five-year business plan, which expires in 2011.

Land Rover is on its fourth owner in 14 years. It is now profitable, but there are concerns here as well. Like Jaguar, it does not fit Tata’s stable of low-cost vehicles for the developing world. It also faces a potential global backlash from the anti-4x4 brigade and needs to step up the development of more environmentally-friendly fuelling systems.

Tata chairman Ratan Tata has a well-deserved reputation as a sober businessman who has expanded cautiously and wisely. Jaguar/Land Rover is his third purchase of British companies in recent years, after Tetley Tea and steelmaker Corus.

They were easier businesses to buy and run than his new premium automotive division. Tata will need to decide how to exploit co-operation with other carmakers, such as Ford, which will continue to supply engines and powertrain, or Fiat, the Italian carmaker on whose board he sits, while preserving Jaguar’s and Land Rover’s brand identities.

Despite the mammoth task ahead, Tata is a safer bet to safeguard the future of Jaguar and Land Rover than a venture capitalist. Its employees, retailers and customers should give this deal a cautious welcome.

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