How Ratan Tata turned the tables on Bill Ford
By Aniket Gupta | 27 Feb 2024
Ratan Tata, the great man from the House of Tata, is often lauded for his humility as well as charismatic persona, love for animals, larger-than-life philanthropic endeavors, and decades of hard work to expand the Tata Group.
But did you know that there was a time when this Indian business leader had to face humiliation from an American businessman? As any proud person would have done, Ratan Tata too took this insult to heart and made a decision that would go down in the history books as one of the most celebrated failure-turned-success stories of all time.
The deal that did not happen
The year was 1998, and Tata Motors, under the guidance and leadership of Ratan Tata, had just launched the Tata Indica, India’s first indigenously designed and manufactured car. Tata expected the car to tackle the Japanese and American cars flooding the Indian market.
Alas, that was not to be. Tata Indica did not soar as the company had hoped, and sales were very low. Things were so bad that Ratan Tata had to consider selling Tata Motors. He selected Ford Motor Company from among the many suitors Tata Motors had.
In 1999, both parties decided to meet, and Ratan Tata and his team flew out to the U.S. to meet Bill Ford, the chairman of Ford Motors, to cut out a deal. The anticipated deal between the two parties did not materialize as expected; instead, it took an unexpected turn.
In the meeting, Bill Ford arrogantly taunted Ratan Tata, stating that he should have never entered the passenger car division as he had no prior knowledge of the industry. That’s not all; Ford went further, saying that he was doing a favor to Ratan Tata by buying Tata Motors.
Cruel words lead to motivation
Ratan Tata is a very simple man, but these arrogant taunts were something even he couldn’t tolerate. He decided to scrap the deal and to fly back to India immediately.
Tata then decided to work even harder to grow the Tata Motors business. He immediately started working on some of the existing models of Tata Motors, such as the Tata Sumo, Tata Safari, and the previously criticized Tata Indica.
Tata Motors improved the fuel efficiency of its cars, made them safer, and even launched a newer version of the Indica named Tata Indica V2. This version soon became one of the favorites among the Indian people and also became one of Tata’s highest-selling cars.
Then came the revenge.
How the tables have turned
During the initial years of the 21st century, when Tata Motors was riding the waves of success, all was not well at Ford Motor Company.
During the Great Recession of 2008, Ford Motor had to sell many of its subsidiaries, such as Volvo, and Hertz, to other companies. Ford was even looking for interested parties to buy Jaguar and Land Rover. That was when Tata Motors entered the fray and struck a deal with Ford to buy Jaguar and Land Rover for $2.3 billion.
Incidentally, during this deal, Bill Ford, this time after tasting his own medicine, admitted that Tata was doing Ford a big favor.
To add salt to the injury, Tata Motors, after acquiring Jaguar and Land Rover, turned these businesses into some of the most profitable automobile divisions in the world and made them a crucial part of Tata Motors.
The chart above represents the annual turnover of Jaguar and Land Rover after the Tata Motors acquisition. The significant revenue growth is a testament to Ratan Tata’s determination.
The moral of the story
Maybe it was the harsh words of Bill Ford or maybe Ratan Tata’s never-give-up attitude, but the fact is that this great businessman turned one of his biggest failures into one of his biggest successes.
The moral to take away from this story for me personally is to always stay humble and patient, whether it is during your lowest of lows or your highest of highs.
Now it may look like Bill Ford is the antagonist in this story; maybe he is, but that doesn’t diminish the accomplishments of Ford Motor Company in its rich and long history. You can read all about the history, innovations, and legacy of Ford Motor Company here.
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