Tata shows commitment to Jaguar Land Rover brand

The acquisition of Jaguar Land Rover by an Indian company has worried some traditionalists but Tata is determined to show that the famous brands are in safe hands. Duncan Tift profiles Tata Motors and looks at the man behind the business, Ratan Tata.

Ratan Tata is a man who loves cars – fast cars and luxurious cars. Trained as an architect, his preferred choice of career would have been a fighter pilot.

The mentality goes a long way towards explaining why he was so keen to add Jaguar Land Rover to his stable of companies.

Ever since speculation first linked his company with the acquisition of the two iconic marques last year, journalists have been clamouring for an insight into his plans.

Would he respect the heritage of the companies, would he continue with a UK production base, would he change the way the companies operate?

In order to protect his cherished aim of acquiring the luxury brands, he has maintained a dignified silence. However, he did provide a brief glimpse during an interview earlier this month with Autocar.

In it he states that the automotive business is one of the most exciting sectors there is and he is able to distil the business down to its essence.

"It’s more exciting than others because the products have a far greater emotional attachment for their owners," he says.

Asked why he wanted to own the brands and whether it was his love of cars or a hard-headed business decision which dictated his actions, he said: "What attracted us was the fact that these are two iconic brands, global in nature and highly respected for their products.

"We believe it is the duty of whoever owns them to nurture the image, to retain their touch and feel, and not to tinker with them.

"They are British brands, and they should remain British. Who actually owns them should not be very important in the way they work."

The conclusion would appear to be that he sees himself more as a custodian of the brands rather than an asset-stripper keen to squeeze out every last bit of value from the marques and then move on.

He adds further down the article: "Our challenge would be to nurture them and make them thrive."

Many commentators are sceptical about whether the pair are the right fit for his company, which is now best known for producing the world’s cheapest car – the Nano, which will retail for the equivalent of £1,250 when it goes on sale later this year.

There have been complaints that Indian ownership will cheapen the brands and make them less exclusive in the eyes of important buyers in the established markets of Europe and the United States.

Sources close to his company say he is well aware of the situation and will be shortly launching a charm offensive to show the famous businesses are safe in his company’s hands.

Privately he is said to be delighted with the acquisition, which raises the standing of his group considerably and illustrates the bullishness of companies in the sub-continent and the fact that they are now prepared to challenge the established order and acquire brands previously the preserve of established economies.

To an extent, Tata already embodies this as within its stable it has former British institutions Tetley Tea and ex-British Steel, now Corus Group.

Although taking on substantial debt to acquire Jaguar Land Rover its ambitions don’t stop there and it is already thought to be eying further high profile acquisitions with speculation focussed on investment bank Close Brothers and the Orient Express Hotels group – it already has the Ritz Carlton in Boston plus other hotels in New York and San Francisco.

What of the man himself? He is clearly a passionate and highly intelligent individual, evident from the success of his business.

Within his own country he is as close to aristocracy as it is possible to get without having blue blood.

However, for a man fronting such a high profile business, he is curiously awkward when in the spotlight, preferring others to take the lead.

This was evident when I attended the launch of the Nano at the Delhi Auto Expo event in January. The anticipation within India for the little car was something extraordinary and the launch itself was a cross between a film premiere and rock concert.

When he drove the first car onto the stage in the exhibition hall it was greeted with a fanfare and lighting display worthy of a coronation.

He got onto the stage, read out a speech and posed for photographs but his relief was obvious when he was able to hand over to his managers and merge into the background.

At a press conference following the launch he sat at a long table flanked by his subordinates and although all questions were addressed to him, he regularly deferred to his managers.

This was a clear example of the management ethos adopted by his company, which seems to prefer the arms-length approach rather than the more intrusive hands-on style.

So, what of the business?

Tata Motors is India’s largest automotive company, with revenues of around £3.5 billion in 2006-07. It is India’s market leader in commercial vehicles, and the country’s second largest passenger vehicles manufacturer. In global terms, it is the world’s fifth largest medium and heavy commercial vehicle manufacturer, and the world’s second largest medium and heavy bus manufacturer.

It employs 22,000 people, who are guided by the work ethic to be "best in the manner in which we operate, best in the products we deliver, and best in our value system".

Established in 1945, over four million Tata vehicles have found their way onto India’s roads since then and with the launch of the Nano it is expecting this to increase dramatically.

It has manufacturing facilities spread across India – Jamshedpur in the east, Pune in the west, and in the north in Lucknow and Pantnagar.

It has also established a new plant in Singur, close to Kolkata in West Bengal, to manufacture the Nano.

The company is also the first from India’s engineering sector to be listed in the New York Stock Exchange (September 2004), while in the same year it also acquired Daewoo Commercial Vehicles, Korea’s second largest truck maker.

The rechristened Tata Daewoo Commercial Vehicles Company has launched several new products in the Korean market, while also exporting these to several international markets.

In 2005, Tata Motors acquired a 21 per cent stake in Hispano Carrocera, a reputed Spanish bus and coach manufacturer, with an option to acquire the remaining stake as well. Hispano’s presence is being expanded in other markets. In 2006, it formed a joint venture with the Brazil-based Marcopolo, a global leader in body-building for buses and coaches to manufacture fully-built buses and coaches for India and other emerging markets.

Tata Motors also entered into a joint venture in 2006 with Thonburi Automotive Assembly Plant of Thailand to manufacture and market the company’s pickup vehicles in Thailand. In the same year, Tata Motors and Fiat Auto formed an industrial joint venture at Ranjangaon to produce both Fiat and Tata cars and Fiat powertrains for the Indian and overseas markets – Tata already distributes and markets Fiat branded cars in India.

Last year saw Tata and Fiat enter into an agreement to build a pick-up vehicle bearing the Fiat name at Fiat’s plant at Cordoba in Argentina. The pick-up sells in South and Central America and select European markets.

The company’s commercial and passenger vehicles are now marketed in several countries in Europe, Africa, the Middle East, Australia, South East Asia and South Asia, while it has assembly operations in Malaysia, Kenya, Bangladesh, Ukraine, Russia and Senegal.

Around 18 per cent of the company’s revenues are derived from international sales and while the Jaguar Land Rover acquisition will extend Tata Motors’ global footprint it is unlikely to be on a massive scale.

Both brands operate in niche markets and it appears that fresh moves to turn Jaguar into a volume manufacturer as Ford tried to do, will not happen.

What the acquisition does do is increase Tata’s presence in a whole new area, namely the United States although what the reaction of the world’s largest consumer is remains to be seen.

There are already fears that the change of ownership will lead to a cheapening of the brands in the eyes of the US consumer, something the company will be working hard to overcome.

But missionaries looking to convert the company to western ways will find them already prepared for the new customer base.

What it will have to do is win over the dealerships and a charm offensive will be high on the list of priorities for the new owners.

Fortunately they inherit some quality products, the new XF saloon is wowing drivers and motoring journalists the world over while Land Rover’s stock has never been higher and with its LRX mini-SUV concept ready to go into production, the future looks rosy.

So rosy in fact, that Ford could well be looking back in a year’s time and regretting its decision.

Tata Motors timeline:

1945 - Tata Engineering and Locomotive established to manufacture locomotives and other engineering products.

1954 - Collaboration with Daimler Benz for the manufacture of medium-sized commercial vehicles. The first vehicle rolled out within six months of the contract.

1961 - Exports begin with the first truck being shipped to Ceylon.

1977 - First commercial vehicle manufactured in Pune.

1983 - Manufacture of Heavy Commercial Vehicle commences.

1986 - Production of first light commercial vehicle.

1991 - Launch of the first indigenous passenger car, Tata Sierra. One millionth vehicle rolled out.

1994 - Joint venture agreement signed with Daimler-Benz/Mercedes-Benz for manufacture of Mercedes Benz passenger cars in India.

1995 - Mercedes Benz car E220 launched.

1998 - Two millionth vehicle rolled out.

1998 - Indica, India’s first fully indigenous passenger car launched.

2002 - 200,000th Indica rolled out. 500,000th passenger vehicle rolled out.

2002 - Signs product agreement with MG Rover.

2003 - Tata Engineering becomes Tata Motors. Three millionth vehicle produced.