There was no particular outcry in the British Isles on this occasion: it is not the first time that the British motor industry's "family silver" (the gold is, of course, Rolls-Royce) has passed into foreign hands. There was some befuddlement, though, that Jaguar and Land Rover (which recently marked its 40th anniversary) were purchased by Tata Motors of India. It was not a pleasant sight seeing such "colonization in reverse", but the British could do nothing, because Jaguar/Land Rover has long been owned by the American Ford company.
In effect, it was Ford that ended their trials and tribulations by pooling the two brands into one group, first buying Jag in 1990 and later Land Rover from Bavaria's BMW in 2000. After six years of ownership the Germans were glad to part with a model which, although selling well, had so many defects that the corporation dubbed it the "English patient." Ford gave the Land Rover good advertising, and the car's image improved, but the management was wrong to think that the "farmer" would sprout wings and also help boost Jaguar sales. One born to plough will never fly ...
Nine months ago, Ford began casting about for a buyer and finally found one. The deal, which was clinched at the end of March (the sides still have some minor details to settle), is a fine illustration of how world car markets change, and what new players enter the global auto landscape.
Ford parted with the "Britons" for a sum that was no more than one-third of what it originally paid for them. Originally it forked out a total of $5.2 billion for Jaguar and Rover. And that was in 1990 and 2000, when the dollar was actually worth something. In return it will get back only $1.7 billion in today's dollars, because out of the overall sum of $2.3 billion Ford pledged $600 million to the Jaguar/Rover workers' pension fund.
The fact that the American corporation agreed so easily to sell its "English patient" suggests the initial purchase was a mistake. Henry Ford would surely have taken the present managers to task. America's second largest auto giant, by buying Jaguar and Land Rover, bit off more than it could chew. These two brands had the same fate as Aston Martin, which Ford also bought from Britain. The latter had to be sold in the Middle East. Ford's management is reported to be thinking of selling another of its European brands - Volvo - "a true-born Swede". True, no longer weighed down with the British "playboy" and "farmer", it will have more room for maneuver. So Volvo could still remain with Ford for a time. But even that is not the most important lesson.
The most important lesson is that new suppliers are emerging on the world market, especially from the BRIC countries (Brazil, Russia, India and China). Each of these four has developed its own techniques for penetration into areas where their presence was not even contemplated 20 years ago. Brazil and Russia are mainly "screwdriver assemblers". And Russia has the least to boast about, although, as our government says, "we open up new pages in auto development" every year. In 2007, Russia produced 1.3 million cars. Brazil made 3 million. Compared with China, which already assembles almost 5.7 million a year, our volumes (especially in view of the country's potential) are peanuts.
Until now, China's main problem has been "imported parts." But it is now radically re-orienting itself to making cars under license or on the basis of European and Japanese veteran models. If China follows the path it took two-dozen years ago in its "heavy auto industry" - trucks, bulldozers and hoists - the world leaders will soon have to make way. According to forecasts by the International Association of Motor Vehicle Manufacturers, in three years' time China may well overtake all other producers and become the worlds leading carmaker, with 6 million cars annually.
India has chosen its own path. Several years ago one might have thought that a country of elephants and fakirs with a desperately poor population could not support a domestic car market and lacked the qualified workforce needed to produce cars for export. Many did, and still do, think in such terms. But that was the reasoning of those who did not know India. As the example of Tata shows, India is ready to purchase running plants abroad and quickly work its way into foreign markets. Especially as its companies have the money.
Tata is today the country's largest industrial corporation, with a capitalization of $56 billion and a workforce of over 300,000 employed in 80 countries. In 2000, it also bought one of the world's biggest British food companies, Tetly Tea, and the British-Dutch metals firm Corus. Its acquisition made Tata the fifth largest steel producer in the world.
The Jaguar and Land Rover plants in Britain will not be closed following the purchase. As before, they will be making cars, only with a strong curry flavor.
The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.
