Indian Company Buys Luxury Brands Jaguar, Land Rover

Topics:  Tata, Jaguar, Land Rover

Anjana Pasricha
March 26, 2008

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India's biggest vehicle maker, Tata Motors, has clinched a deal to buy luxury brands Jaguar and Land Rover from U.S. carmaker Ford. Anjana Pasricha reports from New Delhi, the latest acquisition is yet another sign of the expanding global footprint of Indian companies.

Mumbai-based Tata Motors says it will buy British luxury car brands Jaguar and Land Rover from U.S.-based Ford Motors for $2.3 billion in cash.

The sale was negotiated after Ford decided to sell the two high-end brands as part of a restructuring drive. Ford has posted massive losses in the past two years.

Tata has pledged to keep the identities of the two famous brands "intact."

Roger Madison of British trade union Unite told Indian television that Tata Motors will retain all employees of the two companies.

"They are looking for long-term investments here and they are looking to grow the business," he said. "We are quite excited about that."

Tata Motors controls more than half of India's truck market, and nearly 20 percent of its passenger car market.

Many say the Indian company is an unlikely owner of the two luxury car brands. At the moment, Tata Motors produces sturdy trucks and functional cars for India's domestic market. It has also developed the world's cheapest car, costing $2,500.

Analysts say Tata pursued the deal to gain a global foothold in the automobile sector.

But the takeover comes at a difficult time, when a global economic downturn has dampened demand for expensive cars. Sales of both brands have been declining.

An economist with the Federation of Indian Chambers of Commerce and Industry, Anjan Roy, says Indian companies want to expand overseas after making record profits in recent years.

"Basically, Indian companies are doing well at home, they have done very well, they have the financial muscles now to acquire companies abroad," he explained. "They are looking out to have a much bigger footprint in the international corporate world, in the international market place."

Indian corporations spent more than $39 billion last year on overseas acquisitions. The Tata conglomerate, to which Tata Motors belongs, made the largest acquisition when it purchased British metals producer Corus Group for nearly $13 billion.