Tata Motors is a company very much in the automotive industry spotlight. With its Nano small car it has set a new benchmark for producing a low-cost car specifically for emerging markets. It is also about to extend its automotive market presence through the planned acquisition of Jaguar and Land Rover from Ford. Last week, Julian Rendell spoke to the firm’s eponymous patriarch, Ratan Tata.
If there’s a more relaxed executive pulling the strings of a car company than Tata Motors boss Ratan Tata, I’ve yet to meet him. The urbane Tata is about to take control of Ford’s Jaguar Land Rover division, under intense international media scrutiny, yet the significance of the moment doesn’t seem to be ruffling him one jot.
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Undaunted by the thought that a banana-skin slip-up might affect the JLR buyout talks as they reach their critical point, Tata engaged the world’s press at last week’s Geneva Auto Show and left a lasting impression of a boss prepared to be sympathetic, hands-off and enthusiastic as the new owner of Jaguar and Land Rover.
“Our intention is to look at these brands as they are. Who owns them is a bit of a transparent issue,” he said, “these two brands are very special and whoever gets them has a global responsibility to nurture them. We have a interest in the brands and the cultures behind them, We intend to make them thrive.”
Such comments will come as a great relief to JLR’s embattled workforce and management contemplating new owners just as the companies are turning the corner with fresh new models and improved financial performance.
Of course, the futures of both are tied to ambitious new model plans, which will at least double the US$2bn or so that Tata is likely to have to pay Ford. Reports from India suggest Tata is already preparing a US$3bn finance package, partly to fund the acquisition, but partly to invest in new models.
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By GlobalDataTata himself certainly seems prepared to commit to JLR’s known product plan, which stetches out to 2012 at least: “Capital expenditure is part of the due diligence [of JLR] and it is not a problem in the due diligence.”
Jaguar, for example, is committed to a re-skin of the XJ flagship in 2010, and wants to launch a coupe version of the new XF and resurrect the stillborn F-Type, an entry-level two-seat sportscar. Land Rover meanwhile plans new alloy chassis replacements for the Range Rover and Sport around 2012.
Tata and his management team, including Ravi Kant the boss of Tata Motors, are understood to have seen JLR’s new model program: “What we see we, we like and the technologies are very impressive.”
On specific models, Tata is more circumspect, except to smile knowingly when quizzed on the subject of the F-Type, the US$50k two-seater that’s an obvious Jaguar range extension, yet never managed production: “I do have a strong view about it — I’d be delighted if we have one in the range.”
In another sign of Tata’s low-key approach he downplayed any suspicion that Tata might come in as a heavy-handed owner dictating strategy to JLR: “If we didn’t like what we saw, we wouldn’t be arrogant to think we could change it.”
A similarly softly-softly approach to management at JLR looks likely, which may have been different had a private-investor like the US buyout fund One Equity become Ford’s favoured buyer. “All the enterprises that we takeover, the management stays the same, like Corus, Daewoo Trucks, Tetley Tea. Those managements are still running those companies,” he says.
If these comments could be interpreted as an overly patrician management, Tata is not confusing the significance of the JLR acquisition with dewy-eyed nostalgia for the British brands or the first buyout by an emerging market carmaker of established western nameplates.
“Is it special taking over JLR? Not for me. I don’t think of this a special moment in time. Rather it’s the refurbishing the image of a troubled brand.”
In the car industry, a new business area that Tata himself led the holding company into in the mid-90s, Tata motors is rolling out an aggressive expansion strategy. At Geneva, the headline-winning US$2,500 Nano got its European show debut. “This is an international show and we wanted to give the industry a chance to see the Nano after the Delhi launch in January”.
Tata revealed broad plans to bring the Nano to Europe, “we’re not restricting ourselves to eastern Europe”, without setting a timescale.
Significantly, he confirmed that the plan is to ensure the tiny five-door gets a four-start Euro NCAP rating, which means not just very good frontal and side-impact crash tests, but a high parts-count of content-adding safety equipment.
Tata is also relaxed about the joint venture with Fiat, which has secured Tata a seat on the Fiat Auto board, despite reports that the pick-up truck venture in South America has hit trouble.
“This is a relationship that is open and important. It’s extremely friendly and not finite. The association could be very deep or quite slight as we both choose it to be.”
The South American pick-up is centred on Fiat’s plant in Argentina, which will assemble a version of Tata’s one-tonne pick-up powered by an Iveco truck engine and its bodywork redesigned by Fiat. In India Fiat is planning local production of cars to be distributed by Tata.
A similar plan in Europe might give Fiat dealers access to the Nano. “It could be Fiat’s or our own network, but I doubt it would make sense to do this through Jaguar Land Rover. That would raise questions about the synergies between Tata and JLR.”
Other markets being explored for the Nano include South Africa, where Tata is establishing a sales network for the Indica: “We consider South Africa to be an important market in Africa”.
Elsewhere in the world, perhaps China? “No not China. It has not been seriously looked at. India is as big as China in terms of population and India is enough.”
Also in the Nano’s sights are other Asian countries and Africa, using South Africa as a base for exports.
Tata also wants to stress his interest in the car industry, despite having just about every other type of business to worry about. “I have a personal passion for cars,” he says, “the car industry is different to others, it’s exciting and when you have a passion for styling and technology, all that is very engaging.”
Julian Rendell
