How Ratan Tata bailed out Ford by buying Jaguar-Land Rover, despite the American firm humiliating him years before

Ford chairman Bill Ford thanked Ratan Tata, saying, ‘You are doing us a big favour by buying JLR’

The story of two iconic brands Jaguar and Land Rover entering the Tata stable began with an insult Ratan Tata couldn't bear.

Back in 1998, the legendary industrialist launched his dream project, Tata Indica — India's first hatchback with a diesel engine. But sales initially were slow and Tata Motors decided to sell off its fledgling car business within a year of its debut.

ALSO READ: Ratan Tata death reactions live updates: Condolences pour in for national icon

U.S. auto giant Ford was seen as an ideal candidate. The company acceded to a meeting requirement from Ford Motors. Officials of the U.S. firm came to Bombay House for talks sometime in 1999.

During the meeting at the Tata headquarters, the American company evinced interest in buying out the business. To take the deal forward, Ratan Tata and his team flew to Detroit to meet Bill Ford, then the chairman of Ford. The meeting lasted about three hours but did not go well.

The American businessman was condescending and "humiliated" the Indian businessman, according to a person who attended the meeting.

"You do not know anything, why did you start the passenger car division at all," the Ford officials told their guests, and spoke about doing a favour to the Indian company by buying out the latter's business. The deal fell.

The team decided to return to India immediately after the meeting. On the 90-minute flight taking them back to New York, a sombre Ratan Tata spoke very few words.

The mortifying experience only made Ratan Tata more focused on his goals. He decided not to sell the unit and what followed was a classic example of a failure-turned success story.

2008 Great Recession

Nine years later, Ford was on the verge of bankruptcy following the Great Recession of 2008. Tata offered to buy two iconic brands in the Ford portfolio — Jaguar and Land Rover.

The $2.3 billion all-cash deal was completed in June 2008 and Ford chairman Bill Ford thanked Tata, saying, "You are doing us a big favour by buying JLR'," Pravin Kadle, who was part of the team that travelled with Ratan Tata to the U.S. in 1999, had recounted during a public event in 2015.

Post-acquisition, the Tata Group has scripted one of the most fabulous turnarounds in the auto industry and has been able to position the marquee British brands as formidable entities in the fiercely competitive global car market.

Even as Tata Motors has come a long way and gained market share in India, it continues to earn a significant part of revenues from the JLR.

Today, JLR is the backbone of Tata Motors.

Published - October 10, 2024 02:13 pm IST