Ford has recently invited the bidders for Jaguar and Land Rover (producer of ) to meet the managements of the two firms. The entire bidding process is expected to be completed within the next three weeks. Tata Motors and M&M two of India's major automakers were also invited for the said management meetings, which mean that Ford is considering these two Indian companies as a possible buyer of Jaguar and Land Rover.
According to a Delhi-based MNC consultant one of the reasons why Land Rover has been not so profitable is because it lacks a smaller car in its lineup of gas-guzzlers that is having a hard time avoiding CAFÉ penalties especially since it was increased by the US department of transportation's National Highway Traffic Safety Administration four years ago by 1.5 miles per gallon.
The new rule has made it as standard the increase of 21 mpg for model year 2005, 21.6 mpg for 2006, and 22.2 mpg for 2007. Companies that don't obey the rules are to pay penalties however many automakers were able to offset these against CAFÉ credits obtained from small fuel-efficient cars. The standard set for passenger cars have remained unchanged way back from the 1990 model year at 27.5 mpg.
Industry consultants say that the CAFÉ considerations may affect the assessment of Land Rover business. Furthermore analysts say that the Land Rover deal may also contain built-in clause that will make it impossible for the buyer to cut employees or to restructure the operations at the UK plants for a period of time.
This was further strengthen when Ford has state that it is seeking the assurance of whoever buys the two firms that they will keep all the UK factories namely Coventry, Birmingham, Liverpool--- for Jaguar and West Midlands for Land Rover---operating for at least five years in order to safeguard UK jobs. Around 19,000 people are to be affected in case Jaguar and Land Rover are finally sold.
A former Ford President, Nick Scheele who retired from the company two years ago will stand as the adviser of Ripplewood Holdings which happens to be one of the short listed bidders for Jaguar-Land Rover. Another former Ford executive Jaques Nasser is leading a private equity player One Equity in the Jaguar-Land Rover deal. The automotive world is closely watching the outcome of the imminent royale battle between these two former high-profile executives of Ford.
