India’s jewel could put the glint back into UK marques

Tata, the Indian conglomerate, has moved into pole position in the 1bn race to buy Jaguar and Land Rover and, despite the company’s low UK profile, experts believe it could be the marques’ much-needed white knight.

jaguarTata, the Indian conglomerate, has moved into pole position in the £1bn race to buy Jaguar and Land Rover and, despite the company’s low UK profile, experts believe it could be the marques’ much-needed white knight.

Ford is thought to have selected Tata as its preferred bidder, ahead of private equity group One Equity and Indian rival Mahindra & Mahindra, and one source close to Tata says the deal is “more or less in the bag”.

Acquiring Jaguar and Land Rover would mean instant fame for Tata, but the company is anything but a minnow. It is one of India’s biggest businesses with almost 100 operating companies in sectors from software to energy and hotels. It has 27 publicly listed enterprises, a market capitalisation of £36.5bn and accounts for 3.2% of India’s gross domestic product.

Director of the Institute of Automotive Industry Research, Professor Garel Rhys, says: “Tata is an absolutely enormous company. It has a long history and is not in any way unworthy of buying Jaguar and Land Rover. It could easily absorb the two brands and would have the capital to give them stability.”

ratan%20tataThe deal would be the first step towards Tata achieving its ambition of becoming a major player in the global automotive sector. The company, which also owns steelmaker Corus and Tetley Tea, is one of the biggest truckmakers in India. Its car unit is one of Tata’s only businesses in which the group’s chairman Ratan Tata plays a hands-on management role.

Ratan Tata is regarded as the man who has taken Tata from a group of disparate companies to the well-oiled behemoth it is today. Independent marketing consultant and author Kamini Banga, who has worked with Tata in the past, says: “The markets did not see Ratan Tata as a dynamic leader who would change the face of the company. He was, and is, reclusive, quiet and unlike the stereotype of business leaders. But he had vision and integrity and set about putting the group on a different trajectory.”

Ratan Tata hived off Tata’s packaged goods business and focused on scaling up each of the remaining companies to make them successful in their own right. Banga says Tata’s values are “beyond question” and adds that employee welfare is one of its main priorities.

Tata Motors is planning to build the world’s cheapest passenger vehicle – the “one-lakh car” – which would sell for about £1,250. Some observers are concerned its models are a long way from the two marques it seeks to buy, but Rhys believes there are some synergies. Tata, for example, has a large in-house research and development facility and Rhys thinks Land Rover models such as the Defender could easily be produced in India.

It is understood that Tata will keep all three of Jaguar and Land Rover’s UK factories but critics of the proposed deal argue it could be the beginning of the end of UK car production.

Chris Wood, chairman of branding agency Corporate Edge, says it is inevitable that production will move to lower-cost areas such as Asia but believes it would be a mistake to move all production away from the UK, particularly for a brand such as Jaguar. However, he argues that the marques would be in better hands with Tata than a Chinese manufacturer such as Nanjing Automobile Corporation, which bought MG in 2005.

“Everyone is very focused on the growth and dominance of China – they have less of an eye on India,” adds Wood. “But I think India has a better relationship with the UK. The Anglo-Indian relationship is a long one and I believe Indian companies would think much longer and harder than the Chinese would about the degree to which they would retain the English integrity of a brand like Jaguar.”

Recommended

NHS will only treat responsible patients

Marketing Week

Heavy drinkers, smokers and obese people will not receive treatment from the NHS under news plans. The rules are part of a proposal to be announced by Prime Minister Gordon Brown that will outline the “rights and responsibilities” of patients. The plan is expected to provoke controversy as it ends the NHS’s founding principle of […]

Bebo named best social networking website

Marketing Week

Bebo has been named as the best social networking website in a report by
Computing Which? magazine. The site, aimed mainly at teenagers, was
praised for its attention to security for users.

Bebo beat rival Facebook into second place in the study, wh…

Npower incurs consumer watchdog’s wrath

Marketing Week

Energywatch has slammed European energy companies for “treating Great Britain like a treasure island” after npower revealed plans to hike its prices by 15%. The German-owned company will reveal the full extent of the rise later today (January 4) and its rivals are expected to follow suit. Adam Scorer, director of campaigns at the consumer […]

Comments

    Leave a comment

    Close

    Discover even more as a subscriber

    This article is available for subscribers only.

    Sign up now for your access-all-areas pass.

    If you're an existing paid print subscriber find out how to get access here.

    Subscribers enjoy unlimited access to unrivalled coverage of the biggest issues in marketing, alongside practical advice from the digital experts at Econsultancy.

    With a subscription to Marketing Week Premium you will get full access to:

    > World-renowned columnists

    > Analysis & case studies

    > Exclusive leading-edge insight

    > Carefully curated reports & briefings from Econsultancy

    > Plus, much more including a £300 discount for the Festival of Marketing

    Subscribe now

    Got a question?

    Contact us on +44 (0)20 7292 3703 or email customerservices@marketingweek.com

    If you are looking for our Jobs site, please click here

    Subscribers enjoy unlimited access to unrivalled coverage of the biggest issues in marketing, alongside practical advice from the digital experts at Econsultancy.

    With a subscription to Marketing Week Premium you will get full access to:

    > World-renowned columnists

    > Analysis & case studies

    > Exclusive leading-edge insight

    > Carefully curated reports & briefings from Econsultancy

    > Plus, much more including a £300 discount for the Festival of Marketing

    Subscribe now