Jaguar Land Rover Contemplates a Big Move That Could Shake the Very Core of the Auto Industry
Parent firm Tata Motors has reportedly green-lit the shopping spreeby Kirby, on
Jaguar Land Rover is in the market for a new auto brand, and it’s not just gunning for any manufacturer. Nope. JLR is shooting for the big boys as it’s being reported that the company is looking to acquire a marque brand in an effort to diversify its lineup. The report comes from Bloomberg, which cited sources saying that on top of being on the lookout for an international auto brand, the company is also weighing options on potential purchases of technology firms that can complement the company’s efforts in being a leader in electric technology and autonomous driving systems.
JLR’s push for expansion reportedly has the green light of parent company Tata Motors, which is sitting on a staggering amount of cash amounting to around $6.1 billion. The immediate plan is to use that money to add new products to the fold, whether it’s an established automaker, new technologies, or increased manufacturing capacity. As for the end goal, Tata believes that it needs to build off of the success of Jaguar and Land Rover - the two companies account for 78 percent of Tata Motors’ revenue - by growing its portfolio in the auto scene. It’s still unclear which auto brands JLR is looking into purchasing, but the important thing is that it has the blessing from Tata to start doing some shopping. And, if it just so happens that JLR is going to need extra finances to close a potential acquisition, the mothership is more than willing to provide the financial support to make it happen. Don’t look now, but JLR could be on the verge of shaking up the auto industry.
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What are JLR’s options?
It must be a good feeling for an automaker like Jaguar Land Rover to have the blessing of Tata Motors to acquire assets. It’s hard to believe that as recently as nine years ago, neither Jaguar nor Land Rover were in this position. Back then, Jaguar was struggling, and Land Rover was doing its thing, but not on the level that it is now. The fate of both brands changed when they were purchased by Tata for $2.4 billion in 2008 and look at where they are now. Both brands are thriving, to say the least.
The fate of both brands changed when they were purchased by Tata for $2.4 billion in 2008 and look at where they are now
Now as far as adding another automaker to the fold is concerned, there are a few candidates that JLR can look into, including two Italian marquees whose own parent company is reportedly looking to spin off: Alfa Romeo and Maserati.
Granted, Fiat Chrysler Automobiles hasn’t come out and announced any plans to sell Alfa Romeo and/or Maserati. There have been rumors though that FCA is actually considering it as part of its plans to streamline its own business and focus more on becoming more of a mass-market brand. Neither Alfa nor Maserati are considered mass-market by any means, so if FCA’s strategy is to focus more on selling volume cars, the two Italian brands will become dispensable. Previous reports indicate that if FCA does decide to go this route, it could sell both brands for somewhere around $8 billion, a figure that would be a little more than JLR’s spending money. Then again, Tata is reportedly willing to top up JLR’s funds if it means being able to close a deal so if nothing else, there’s a possibility that we could end up hearing about discussions between JLR and FCA.
Acquiring brands like Alfa Romeo and Maserati may be the groundbreaking development here, but don’t sleep on JLR pivoting its focus on purchasing new technologies instead
Acquiring brands like Alfa Romeo and Maserati may be the groundbreaking development here, but don’t sleep on JLR pivoting its focus on purchasing new technologies instead. It’s already invested $25 million in ride-sharing service Lyft as part of a funding round that closed earlier this year. It’s not guaranteed either, but it’s also possible that we’ll see this relationship expand into something more than one party investing on the other.
Whatever happens in the interim, this is one news story that we should be all paying close attention to. JLR’s making serious moves to be a bigger player in the auto industry and if it achieves its reported goal of bulking up its portfolio, at least one prominent automaker could be changing ownership sooner rather than later.
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