BMW Should Buy Jaguar Land Rover From Tata Motors: Report

A report prepared by Sanford C. Bernstein says that BMW should look at acquiring Jaguar Land Rover from Tata Motors.

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BMW and JLR have already partnered together to develop electric vehicles

Highlights

  • BMW used to own Land Rover from 1994 to 2000
  • JLR could be valued at about 9 billion pounds
  • Acquiring JLR could lead to a 20% increase in BMW's earnings

Analysts at Sanford C. Bernstein, a global brokerage firm believe that BMW should acquire Jaguar Land Rover from Tata Motors. The firm says that Jaguar Land Rover could have a valuation of around 9 billion pounds and it will be a good buy for BMW. Bernstein believes investing in Jaguar Land Rover could be beneficial for the German car manufacturer as it could potentially contribute almost a quarter of BMW's volumes to its total sales figures along with leading to a 20 per cent increase in earnings for the German company. BMW earlier used to own Land Rover and the Rover group from 1994 to 2000. Tata Motors had acquired Jaguar Land Rover from Ford Motor Company in June 2008, for a price of $2.3 billion at the time.

Also Read: Jaguar Land Rover & BMW Announce Partnership For EV Development

"BMW is overcapitalised and awash with cash. It has run into the limits of growth for its product range and brand," analysts including Max Warburton said in a Bernstein report. BMW could acquire it at a discount to book and turn the British car maker into a profit making company.

Currently, BMW is already working on a plan with a target to save $14 billion and Jaguar Land Rover too is looking to cut about 4,500 jobs along with saving up to 2.5 billion pounds. In fact, both car manufacturers have already signed an agreement to develop next-gen electrification technology in June 2019.

"JLR is severely challenged, both operationally and financially, but could massively lower both its fixed and variable costs under the wing of a bigger partner," the Bernstein report said. The acquisition would need Tata Motors to swallow its pride and in the same vein, BMW will have to be less conservative and keep an open mind.

The suggestion comes on the back of Tata Motors' facing losses and reporting a slowdown in its volumes growth over the last few months. Plus, the sales slowdown in China, perhaps the biggest car market in the world and BREXIT hasn't helped Jaguar Land Rover by any measure.

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Source: Auto News Europe

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