Ford Motor luxury cars

Tata Motors is now in the luxury car and truck business—finally—with a signed agreement to buy the Ford Motor Company’s Jaguar and Land Rover brands for $2.3 billion. The deal is expected to close by the end of the second quarter after some final leaps through legal hoops.

Ford said today that it has entered into a “definitive agreement” to sell the British brands that were once part of its much-touted Premier Automotive Group, which included Lincoln and Aston Martin when it formed in 1999 and subsequently dropped Lincoln but added Volvo, to the Indian industrial group. Only Volvo remains under Ford stewardship.

Workers are assuaged with the promise Ford will contribute about $600 million to Jaguar and Land Rover pension plans.

In talks leading up to the sale, Ford sought—and says it found—a buyer committed to preserving the brands and keeping much of the workforce (white- and blue-collar) intact.

“We have enormous respect for the two brands and will endeavor to preserve and build on their heritage and competitiveness, keeping their identities intact, ” confirms Tata chairman Ratan Tata, in a statement.

Ford Still Major Supplier

As expected, the deal calls for Ford to continue to supply Jaguar and Land Rover with technologies, powertrains, stampings, components, engineering, continued research and development, and other support services for differing periods of time. For the first year, financing will still be provided through the Ford Motor Credit Company.

Many top-level Jag and Land Rover execs seem to favor the sale. The official statement from Geoff Polites, who will continue as CEO of Jaguar and Land Rover, says, “Our team has been consulted extensively on the deal content and feels confident that it provides for the business needs of both our brands going forward.”

Phil Popham, Land Rover managing director, told Car and Driver in an interview at the New York auto show that the brand benefited from being part of Ford, which helped it to launch its highest-quality products to date, generating a positive momentum that will carry forward. He notes the current product plan was developed as part of the Ford family, which necessitates Ford continuing as the main supplier. But the sale to Tata opens up possibilities of working with others in the future.

Popham says Tata approved of the existing business plan, and the feeling is the Indian owner is buying the brand to invest. If Tata Motors follows the model of Tata Steel, which in January 2007 bought Anglo-Dutch steelmaker Corus in a $12 billion deal and turned a money loser into a money maker, then the car brands can take heart. “They’re a conglomerate investing for the long-term, ” Popham says.