Analysts say BMW should buy Jaguar Land RoverSeptember 18, 2019
Interesting times have come, especially for the automotive industry.
Current issues range from Brexit to recession in sales in China, where trade tensions have affected earnings. However, analysts at Sanford C. Bernstein believe they can help the two automotive giants. In their opinion, BMW should buy a Jaguar Land Rover from Tata Motors, reports Automotive News Europe.
“BMW is overcapitalized and packed with cash. He has reached the limit of growth for his product range and brand. “JLR faces serious challenges both in operational and financial terms, but can significantly reduce both fixed and variable costs under the wing of a larger partner,” – said analyst Max Warburton in a research note.
Buying the JLR for £ 9 billion ($ 11.2 billion) could increase BMW’s profit by 20%, Bernstein added. It would also contribute almost a quarter to the volume of the Bavarian automaker. However, “Tata must absorb her pride in order to sell.”
A buying deal between BMW and the JLR can also turn out to be “emotionally difficult” when you look at how BMW owned the Land Rover back in the 1990s, which was “a traumatic period for the Bavarian company, and there are executives in Munich” who still emotionally traumatized by this experience, ” – wrote Warburton and his colleagues.
BMW is currently working on a plan to save $ 14 billion, while the JLR is implementing a 2.5 billion pounds ($ 3.1 billion) savings program and is cutting 4,500 jobs. It is also worth mentioning that the two companies recently decided to work together to develop the next generation of electric drives.
“With Jaguar Land Rover, we found a partner whose requirements for future generations of electric cars are largely consistent with ours. Together, we have the opportunity to more effectively meet customer needs, reducing development time and faster introducing cars and the latest technology to the markets, ”said Klaus Frelich, Board Member of BMW AG, Development Earlier this summer.
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