Tata Introduces Limping Luxury Brands to India

Tata Motors has introduced its Jaguar and Land Rover brands in India, one of the world’s fastest-growing automobile markets. But the celebratory announcement to mark the occasion has been tempered by plummeting sales and the threat of job cuts and factory closures at both brands.

For the first time in eight years, Tata reported an annual loss. The culprit: a $504 million drain inflicted by struggling Jaguar Land Rover on the Indian company’s bottom line. Tata bought the historic brands for $2.3 billion from Ford in March 2008.

Unfortunately for Tata, the purchase was soon followed by a collapse in the global economy. Sales of luxury sedans and S.U.V.’s – core to the Jaguar Land Rover portfolio – have been hit especially hard. According to Reuters, during a 10-month period ending in March, Jaguar Land Rover sales fell to 167,000 vehicles, compared to 246,000 in the same period the previous year.

Mr. Tata maintained his optimism during ceremonies held last Sunday welcoming the British makes to India. “We at Tata Motors are proud to have these brands,” he said, according to The Economic Times, saying it was a “terrific decision.”

But questions linger as to how Tata — relatively unknown outside of India and a specialist in budget-minded vehicles — can align its operations with two British companies synonymous with prestige, power and a well-heeled clientele.

Base versions of the Tata Nano city car start at $2,200 (taxes and fees included), whereas prices for Jaguar Land Rover products in India will begin at more than $120,000. While the Nano has been well received by the media – including my test drive of the range-topping LX version – the fact remains that the tiny four-door has none of the frills (and even less of the social status) typical to Jaguar and Land Rover vehicles.

The Indian lineup of Jaguar and Land Rover vehicles will include the XF and XFR sedans, sporty XKR coupe, Land Rover Discovery 3 and the Range Rover S.U.V. Tata Motors said it would develop a dealer network for Jaguar Land Rover this year and next. According to a report in The Business Standard, Land Rover is also negotiating with the Indian government to supply military vehicles to the armed forces.

That news might provide little relief for Jaguar Land Rover employees in Britain. The Birmingham Post reports that Prime Minister Gordon Brown of Britain has held talks with Tata regarding the company’s threats to close British factories to stem the flow of red ink. Belt-tightening by Tata could also put a crimp on the development of future models, such as a hybrid version of the Jaguar XJ sedan and an eco-themed XE sports car.