What Tata Means For Jaguar And Land Rover

It's instructive to know that thoroughly British Tetley Tea hasn't changed in the eyes of the consumer since Tata Group bought it in 2000. Or that the British/Netherlands company, Corus, remains Europe's second-largest steel manufacturer, with annual revenues of $22 billion less than two years after Tata bought it.

General consensus is that Tata Motors Limited will let Jaguar Land Rover (as it's now called) run pretty much as-is, with most its workforce remaining in England. To recap the deal: Tata Motors pays Ford Motor Company $2.3 billion in cash and then Ford contributes $600 million to Jag/LR pensions at closing, expected by the end of the summer. Jag/LR will continue to buy Ford parts, supplies and engineering support.

Ford paid $2.5 billion for Jaguar in 1990, then paid BMW Group nearly $3 billion to acquire Land Rover during Jac Nasser's buying frenzy in 2000. Including the pension provision, Ford has lost roughly $3.8 billion on Jaguar and Land Rover, plus development money sunk into the brands.

What does Tata Motors get out of the deal, beyond the ghost of Lucas electrics? It gets a good dose of global automaking credibility. Its current lineup, consisting of the Tata Indica, Indigo/station wagon and Safari and Sumo SUVs are sold in South Africa, Turkey, various parts of Central Asia, Venezuela and in Russia, Italy and Spain. The $2,500 Nano is a Third World car only. Of that lineup, the midsize Safari turbodiesel seems the only model that's remotely ready for markets like ours.

Nevertheless, Tata Motors, founded in 1945, launched the Indica, its first indigenous car, in 1998 and is far ahead of any Chinese brands in actually building its own designs. It could take advantage of experience with Jaguar Land Rover in the U.S. market and sell credible low-end cars here by the middle of the next decade, if it chooses.

2009 Jaguar XF

What will Tata do with the Brits? It benefits from the very recent launch of the Jaguar XF, with a new XJ on the boards and talk of reviving the F-Type concept design (with no apparent platform for it). And Land Rover could have the LRX ready for production very soon. Until then, the LR2 and the soon-to-be discontinued X-Type (no longer sold in the U.S.) are the only models sharing platforms with Ford.

There's a new Ford-based Jaguar crossover on the boards that's designed to replace the X-Type wagon, but you can bet its 2010 model year launch is likely to be delayed, at the very least. The big question is a new, BMW 3 Series-size Jaguar. Tata could make Jag an even smaller niche maker and sell only XF, XJ and XK, and pay gas-guzzler taxes, or it could develop a new, smaller rear-drive, six-cylinder sedan.

Think of what that would do for its credibility.