The revenge story of Tata over the Ford

When I bought a Tata car in 2016, many people advised me not to buy it because they believed that the Tata company specializes in manufacturing trucks but not in car.

Among those who gave these advice, there were many who do not even know how to drive a car.

Today I am going to share  “The revenge story of Tata over the Ford"  is just a myth story. In fact its a real story of a huge professional success of Tata.

On June 2, 2008, Tata Motors acquired the Jaguar Land Rover businesses from Ford Motor Company for US$2.3 billion (Rs 9,200 crore), as first announced in a full-cash transaction on March 26, 2008. 

Today marks 14 years since Tata Motors revived Jaguar Land Rover as one of the largest and most successful automotive brands in the UK.

The global recession in 2008 not only restricted car sales (particularly the luxury and SUV segments), but it also limited the auto industry's access to good credit from banks.

The apprehensions started spreading throughout the scope of the acquisition as both Tata and JLR catered to completely different segments in the passenger car segment. Tata and JLR initially had to address the fact that they were two completely different entities, with different underlying value chains and business models. As a first step, Tata Motors retained the existing management structure at JLR and did not impose Tata management.

Later, for the first time, JLR became responsible for his own money and Tata assisted him in setting up a proper cash management system in the company. With good support from strategy advisor Roland Berger, JLR was well on its way to profit. Ten to 11 different cross-functional teams were set up at JLR. To meet the needs of product development, technology up-gradation and capital expenditure, Tata pumped in around £1 billion.

It also raised cash by selling some shares of Tata Steel and other groups in the parent company to maintain cash flow. In 2010-11, there was a rapid increase in sales due to new product launches and hence, improved market sentiment. With the success of the XJ in 2010, JLR accounted for more than half of Tata Motors' business in 2010. JLR's debt-to-equity ratio declined to 1.6 times from 4.5 in 2009. JLR posted profit for the first time since the acquisition in 2010.

Today, the iconic British brand has more than 43,000 employees. JLR has designed its in-house petrol and diesel engine named 'Ingenium' which meets all future global emission norms. It has also announced a timeline for electrification of its entire range. Manufacturing is taking place outside the UK, such as in China, India, Brazil, Austria and even Slovakia. JLR has also embraced the electrification megatrend with the development of the Jaguar I-Pace and Range Rover PHEV.

To further boost its futuristic prospects, JLR recently showcased an autonomous car that is capable of operating on all kinds of terrain. Tata Motors benefits from this acquisition with direct experience in developing high performance designs through implementation of some best practices from JLR. This significantly increased the success rate of Tata Motors with new launches.

Tata has also claimed that certain practices of JLR have improved the reliability of the product without requiring any physical verification.