Stock Market Analysis Tata (TTM) Gets Jaguar and Land Rover from Ford (F)
In an effort to bolster its technology credentials and to enter the luxury car market, Tata (TTM) has arranged to buy the Jaguar and Land Rover brands from Ford (F). The announcement was made yesterday, and today TTM struggles on the stock market as Ford stock makes slight gains.
TTM did get some pretty sweet things out of the deal. A Ford press release explains the terms of the deal:
As part of the transaction, Ford will continue to supply Jaguar Land Rover for differing periods with powertrains, stampings and other vehicle components, in addition to a variety of technologies, such as environmental and platform technologies. Ford also has committed to provide engineering support, including research and development, plus information technology, accounting and other services.
In addition, Ford Motor Credit Company will provide financing for Jaguar and Land Rover dealers and customers during a transitional period, which can vary by market, of up to 12 months.
But can Tata cut it? Tata is famous for its release of a $2,500 car in India, and mostly it is known for its mediocre quality. Which is why Ford has to provide so much support in terms of technology and parts. It’s declining share price may be a sign that investors don’t believe Tata can pass muster. On top of that, the global economic slowdown means that the market for luxury vehicles is likely to shrink. Can Tata keep up when it is putting money into a market that continues to decline?
On the Ford end, it is probably a helpful sale. Not only does Ford get a cushion, but it also gets rid of two brands that have been bleeding out capital for years. Ford is now working on consolidating its North America operations. This is a good move, since its foreign ventures have generally fallen flat.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional.Tags: TTM, Ford (F), Tata Ford deal, stock market news,
stock market analysis, Jaguar Land Rover
