What Are The Greater Implications of Ford's Sale of Jaguar & Land Rover to Tata Motors?

Implications: With total losses exceeding $15 billion in just the past two years alone, Ford was clearly desperate. It had no choice. It needed cash, and fast. 

Analysis: As many of you know, on March 27, Ford completed negotiations to sell its Jaguar and Land Rover divisions to Tata Motors, a division of the Indian conglomerate Tata Group. The deal went for a reported $2.3 billion. despite Ford's original cost of $5.2 billion for the duo ($2.5 billi9on for Jaguar in 1989 and $2.7 billion for Land Rover in 2000). However, after paying $600 million into the pension funds of the two companies, the deal only netted them $1.7 billion.

But with total losses exceeding $15 billion in the past two years alone, Ford was clearly desperate. It had no choice. It needed cash, and fast.

We have already seen how Asian and European auto makers have taken leadership of what was once the pride of American manufacturing. One need only to look at Detroit's socioeconomic demise over the past two decades to see the effects of the transformation.

Going forward, it very possible we could see a government bailout for the U.S. auto makers. With some analysts openly speculating on a potential bankruptcy brewing for one of the Detroit Three. When one compares the downward momentum of Ford GM and Chrysler to the soaring growth to Tata Motors, this further demonstrates the longstanding trend of manufacturing and innovation transfer from American soil to developing nations.

Ultimately, the sale of these two auto divisions is only part of a trend that has been going on for over a decade.

In conclusion, Ford's  "fire sale" of Jaguar and Land Rover represents just anther signal of the U.S. consumption orgy fueled by delusional gains and dependence on foreign credit.