New Delhi: We need to talk about Jaguar Land Rover.
That’s the message from Sanford C. Bernstein analysts, who say BMW AG should buy the British luxury brand from India’s Tata Motors Ltd.
“BMW is overcapitalised and awash with cash. It has run into the limits of growth for its product range and brand,” analysts including Max Warburton wrote in a research note Wednesday. “JLR is severely challenged, both operationally and financially, but could massively lower both its fixed and variable costs under the wing of a bigger partner.”
The suggestion comes as Tata Motors’ losses mount, with a sales slowdown in China and Brexit adding to its woes. BMW is also navigating trade tensions between the U.S. and China that have weighed on profit, and the unresolved political future of the U.K., where it makes Mini and Rolls-Royce cars.
Buying JLR for 9 billion pounds ($11.2 billion) could add 20% to BMW’s earnings, according to Bernstein. It would also contribute almost a quarter to BMW’s volumes, but “Tata would need to swallow its pride to sell,” the analysts said. They also said the German automaker would have to be less conservative.
A deal would be “emotionally complex” due to their former relationship, when BMW owned Land Rover and the wider Rover group in the 1990s, Warburton and his colleagues wrote. “It was a traumatic period for the Bavarian company and there are executives in Munich who are still emotionally scarred by the experience.”
Still, the logic for an acquisition is compelling, they said.
BMW is working through a $14 billion savings plan and JLR is undergoing a 2.5 billion-pound savings program and cutting 4,500 jobs. The two already agreed to collaborate on their next generation of electric cars earlier this year. BMW has previously ruled out equity ties with the unit of Tata Motors.
A representative for BMW in India said Wednesday that the company doesn’t comment on speculation, while Tata Motors didn’t immediately respond to an email seeking comments.
Tata Group bought the maker of the Jaguar XE sedan and the Land Rover Discovery sport utility vehicle from Ford Motor Co. in 2008 for $2.3 billion. The Indian salt-to-software conglomerate has been exploring strategic options for JLR, including a potential stake sale, people familiar with the matter have said. Tata Group has denied that.
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JLR is in the utility and premium cars segment. The robust platforms that uses for most of its vehicles are time tested and Reverend across the industry. Apart from direct sales of vehicles, it can get into licensing agreements to share its platform with other manufacturers. Also migrate those platforms to Tata and bring world class vehicles to domestic market.
A tech transfer from JLR to Tata had not seen quality products for local consumption. At a time when there global players are targetting India as their emerging market, Tatas looking to China and Europe to market is offerings is ironical.
We’re Indians are a patriotic lot and of given a quality product, would be happy to adopt and recieve it with open hands
Tatas….. Are u listening
Mr.Bernstein, please again don’t Ramayan Tata’s ego, otherwise coming years , BMW will be take over by TATA, and you will remember your speech.
First, Tata Motors should buy BMW .
Second, JLR production and business should be done in India.
First remove Rotten Thatha. All his stupid decisions have resulted in heavy losses. Corus, French chemical units, European luxury hotel group, Indonesian coal mine, Jaguar LR etc
If the idiot likes West Europe, he should have bot European art = paintings, sculpture, tapestry, books etc which today would be worth 10 times instead of losing 80% of value!
Why don’t you get out of our country before passing such comments on such a great personality.He has provided such a huge employment even after suffering losses instead of reducing manpower.
Hats of to such a great legend.If u dare buy at least one company or Ur so called European Painting and ho ahead..
Before comments, read history.
You stupid, don’t ever try to insult our idol.
He saves JLR from debates, not just like to post a comment.
Again do not hurts his ego, he will buy you too.
Well I suggest and foresee that it would be other way around TATA buying out BMW and possibly Lufthansa lol.
Tata motors owned JLR, is in huge debt, losses, and further loss of market economics in Asia, Brexit, China etc. It needs huge funds immediately to fund R&D. It’s going to be sold, within a Yr, to the best buyer. There is a Smoke. There is no smoke with 😂witout Car
i dont think tata will sell jlr. the way i see it, tata motors has immensly benefited from jlr technology collaborations. just look at the range of new products from tata motors. they are world class
Tata Motors shoul wind up white elephant like JLR which is mounting not only huge losses ,affecting operational profit ratio not able to sustain ups & down fluctuations in International market scenario.Need to take a break on JLR Business .
Uthaiah, right on the money. If Tata Motors starts assembling JLR in India on the same modules as VW, the Indian market is enough for JLR’s profits to go straight out of the roof. Jaguars, Evoques, Vogues, Velars & the new Defenders will be more affordable to a very fashion conscious Indian audience.
Behind every dark cloud there is a silver linning is best exemplified by this ground breaking shift.
Indians do support to Tata motors to keep going with JLR or just shut the fuck up…..:)
If BMW buy JLR? They should immediately replace the JLR drive train with the BMW 4wds asap.
This is business and it is cyclical so profits and losses are part of business now US-China trade war is coming down and after some period the brexit will resolved and definitely Tata motors will come in profits at domestic and international markets.
Rather, they should move their production units to India. Their production cost will come down heavily.
TATA Motors should exit car business totally including Brand in India.
It will ban emotional desicion.
Business men should not attach emotion they have ensure a healthy bottom line.
No use in bleeding resources
Hope Ratanji will take such hard desicion for the betterment of the group