When the Japanese car companies made their jump from cheap small cars to respectable automobiles, they started their luxury brands (Acura, Lexus, Infiniti) separate from the main brands (Honda, Toyota, Nissan). The Koreans haven't reached this point yet, but now the newest players in the world automobile industry, China and India are buying their brand names instead. Nanjing Automobile Group bought Rover in 2005, although they lost the Rover name to Ford, which is now being sold to Tata along with Jaguar, another once British car company. (By the way, Britain has no more car companies, and if you're curious, Aston Martin is owned by Kuwaiti investors) If the whole Rover-MG Rover-Land Rover thing confuses you (it did me), Wikipedia has a decent explanation.
So what's different now from fifteen years ago when the Japanese car companies were developing their luxury brands? What will happen in another fifteen years? Will Lexus be Korean and Pontiac be Brazilian? What's a band anyway?
LONDON (Reuters) - U.S. automaker Ford (F.N: Quote, Profile, Research) has agreed to sell its luxury brands Jaguar and Land Rover to India's Tata Motors (TAMO.BO: Quote, Profile, Research) for more than $2 billion, according to a source familiar with the matter.
Ford, which signed the deal on Tuesday, plans to publicly announce the transaction in New York at 8:00 a.m. EDT on Wednesday, said another source.
The deal will also see Ford pay about 300 million pounds ($598 million) into Jaguar and Land Rovers' pension funds, according to unions.
Ford declined to comment, adding "our first responsibility is to communicate with our employees."
The sale had been expected at the start of this month, but it was delayed as the two firms discussed their future relationship, including technology sharing and Ford's provision of engines and body parts for the two brands.
Tata, India's top vehicle maker, has been in talks with Ford since it was chosen as the frontrunner to buy Jaguar and Land Rover a few days into 2008.
Tata is pursuing the deal to gain a substantial foothold outside India.
But analysts have questioned how Tata will incorporate the luxury brands into its stable of sturdy trucks and functional passenger cars, including the Nano, the world's cheapest car which it unveiled in January.Analysts have expressed concerns about how Tata Motors would fund the deal, and how the global, marquee brands would fit into its stable of trucks, buses and passenger cars, including the $2,500 Nano, the world's cheapest car which it plans to begin selling later this year.
Tata Motors has announced plans to raise $4 billion of funding, which is expected to help finance the Ford deal and the manufacture of the Nano, which it unveiled in January.
The deal comes at a time when the credit-market crisis has raised borrowing costs and deterred deal-making across the globe.
Standard & Poor's placed Tata Motors on review for a possible downgrade in January from its current high-yield "BB+" rating, citing the potential increase in its debt load from the acquisition of the venerable Jaguar and Land Rover brands.
Tata Motors, which has a market value of $6.5 billion, is a member of the Tata Group, which comprises 98 companies in various sectors including steel, salt, software, energy, cars and trucks, communications and chemicals.
The Tata Group has made a number of overseas takeovers in recent years, including last year's $13 billion buy of Anglo-Dutch steelmaker Corus by Tata Steel Ltd (TISC.BO: Quote, Profile, Research).
(Editing by John Mair and Quentin Bryar)
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