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March 13, 2003

COMMENT: MG Rover/Tata: another Asian connection

Tata and MG Rover have forged a deal whereby Tata will provide the British company with a new small car. Tata's strategy seems to be to offer niche market vehicles that MG Rover's existing range does not address. The Indian conglomerate sees this agreement as only the beginning of a potentially much longer lasting relationship.

By bcusack

Tata and MG Rover have forged a deal whereby Tata will provide the British company with a new small car. Tata’s strategy seems to be to offer niche market vehicles that MG Rover’s existing range does not address. The Indian conglomerate sees this agreement as only the beginning of a potentially much longer lasting relationship.

India’s second largest industrial conglomerate, Tata, is to provide British MG Rover with a new small car based on the Indica; an Indian domestic market vehicle. Up to 170,000 units will be supplied to the British company over the next five years.

The new vehicle, which will be Rover-badged and priced at around £9,600, will arrive in Europe in September. As part of the new deal, MG Rover will hold non-exclusive rights to sell Tata vehicles in Europe alongside Tata’s existing sales networks.

The deal follows several months of rumour over the two companies’ dealings with each other, which notably included speculation over the possibility of Tata providing a low-cost roadster product with which MG Rover could revive its legendary MG Midget brand. However the current agreement appears to be the first real, commercial development made by the Indian company with MG Rover.

The Geneva motor show recently provided Tata with an opportunity to display a range of vehicles including the Indigo, a small estate car and the Safari and the Sumo, two SUVs. Tata’s strategy seems to be to offer niche market vehicles that MG Rover’s existing range does not address.

MG Rover already has an existing foreign partnership with Chinese automotive group China Brilliance for market and model sharing. The partnership is aimed at developing a lower-medium hatchback to replace the Rover 25 and MG ZR models. This vehicle would be one size up from the Tata developed Indica and would complement the existing range of MG Rover vehicles.

However this Chinese alliance may be facing difficulties since the Liaoning provincial government seized control of China Brilliance in December 2002 after accusing its chairman of economic crimes. While MG Rover insists that the Chinese Brilliance partnership is still in place, Tata may be hoping to be viewed as a suitable replacement in the future.

SOURCE: DATAMONITOR COMMENTWIRE (c) 2003 Datamonitor. All rights reserved. Republication or redistribution, including by framing or similar means, is expressly prohibited without prior written consent. Datamonitor shall not be liable for errors or delays in the content, or for any actions taken in reliance thereon.

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