With its US vehicle sales down 20% in September, Ford (F) could use some quick cash. It may need it to fund a union controlled health care fund to get the liabilities off of its balance sheet. But, it will have to come up with billions of dollars to make the change, a change which should help its North American P&L.
The Independent is reporting that India conglomerate Tata, which owns Tata Motors, has the inside track to buy Jaguar and Rover from Ford. As the paper points out "from Ford’s perspective, it is an admission of failure. The Detroit giant bought the companies in the hope of mounting a serious challenge to big luxury car makers like BMW. It will absorb a massive loss to get rid of them."
Tata may end up in a venture with Fiat to produce parts for the two car brands. Because their production volume is low, component costs can be high.
The question remains, though, if Tata thinks it can make money on the brands, why can’t Ford?
Douglas A. McIntyre
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