BMW should take Jaguar Land Rover off Tata Motors’ hands for the benefit of all.
That’s according to analysts at Sanford C Bernstein, who published a research note today, saying: ‘BMW is overcapitalised and awash with cash. It has run into the limits of growth for its product range and brand.
‘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.’
Tata Group bought JLR from Ford for $2.3 billion in 2008 and has been reportedly looking into strategic options for the British manufacturer, although that has been denied by Tata, which is suffering increasing losses. Meanwhile, trade difficulties between the US and China plus Brexit uncertainty are affecting BMW.
Analysts at the research and brokerage firm suggest that buying JLR for £9bn could increase BMW’s earnings by a fifth as well as bolstering its volumes by nearly 25 per cent, although that would mean Tata having ‘to swallow its pride to sell’ and any deal would be ’emotionally complex’ because of the past history, with BMW having owned Land Rover as well as the Rover group in the 1990s. ‘It was a traumatic period for the Bavarian company and there are executives in Munich who are still emotionally scarred by the experience,’ the report authors said.
There’s a strong argument for it, though, they added, with BMW currently engaged in a $14 billion savings plan, JLR shedding thousands of jobs as it looks to cut costs too, and both of them having joined forces over electric cars.
BMW in India and Tata would not comment on the report.
MORE: BMW and Jaguar Land Rover announce electrification collaboration
MORE: JLR suffers pre-tax loss of £3.6bn for year but profitability returns in last quarter
