Detroit After spending billions of dollars on Jaguar and Land Rover, Ford Motor Co. gave up on the storied British automakers Wednesday and unloaded them to India's Tata Motors Ltd. for a mere third of the original purchase price.
Ford nets about $1.7 billion, a far cry from what it paid for the properties - $2.5 billion for Jaguar in 1989 and $2.7 billion for Land Rover in 2000. Counting losses and product development, analysts figure Ford spent more than $10 billion on the brands.
Those acquisitions, like General Motors' purchase of Saab and Chrysler's entanglement with Mitsubishi, came when cash was rolling in at the U.S. automakers as drivers snapped up cars and pricey pickup trucks and sport utility vehicles.
But Ford's fortunes have changed, with slumping U.S. sales and billions in losses. The fire-sale price comes as the Dearborn, Mich.-based automaker concentrates on its main brands.
"Now, it is time for Ford to concentrate on integrating the Ford brand globally, as we implement our plan to create a strong Ford Motor Co. that delivers profitable growth for all," said Ford Chief Executive Alan Mulally, who grew up in Lawrence and graduated from Kansas University.
"You have to cut your losses at some point," said Erich Merkle, vice president of auto industry forecasting for the consulting firm IRN Inc. in Grand Rapids. "It's been draining them of cash and resources."
Tata is India's oldest and largest conglomerate, with holdings in steel, information technology and autos. It should have the cash to save Jaguar and Land Rover and develop new products to better compete with luxury automakers, Merkle said.
The proceeds of the deal aren't enough to rescue Ford's finances, but the sale will allow the company to focus on restructuring its core brands, Merkle said. Ford does not break out financial results for its individual brands, but Merkle said Jaguar has never made a profit in the years Ford has owned it.
Ford, which lost $12.6 billion in 2006 and $2.7 billion last year, has been looking to sell the brands for months. It has mortgaged assets to keep operating and expects to burn up $12 billion to $14 billion until 2009, when it plans to become profitable again.
Ford shares fell 13 cents to $5.87 Wednesday. They have traded in a 52-week range of $4.95 to $9.70.