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A classy cat relocates

Times Staff Writer

Inspector Morse tooled around Oxford in a Mark II. James Bond’s archenemy, Zao, drove an XKR roadster, with an optional Gatling gun mounted behind the seats. When former British Prime Minister Tony Blair pulled out of 10 Downing Street for the last time last year, it was -- how else? -- in the back seat of a Jaguar.

There have been Lotuses and Triumphs, Aston Martins and MGs, but no vehicle has epitomized the once-legendary British motor industry like that most English of cars, the powerful, sultry Jaguar.

Except that, for the better part of 18 years, Jaguar has been owned by Ford Motor Co. of Detroit. And that the brand is about to be acquired by another vestige of Britain’s long-ago colonies.

India’s Tata Group, in fact, wants to take off Ford’s hands not only Jaguar but Land Rover, the British matron of sport utility vehicles in which Queen Elizabeth II has been known to flog through the gardens behind Windsor Castle.

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The importance of one of India’s muscular conglomerates riding to the rescue of British legends -- and paying as much as $2 billion to do so -- isn’t lost on either side of the ex-empire.

The Tata deal, which could be sealed next week, “has made us all proud,” said Debashis Chakraborty, a government official in Kolkata, the onetime capital of the British Raj.

Neither Indians nor Brits have failed to appreciate the historical ironies involved. In Britain, though, the reaction has been more mixed, with optimism that Tata Chief Executive Ratan Tata will be able to help restore the brand to its former glory spiked with faint regret that it took an Indian giant to do the job.

“I think Sir William Lyons would be turning in his grave, quite frankly,” said Barrie Birkin, a longtime Jaguar owner from Matlock, in the Derbyshire Dales, referring to the legendary co-founder of the company who presided over the marque’s preeminence in world motor sports and luxury car design through 1972.

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“I can’t believe it, to tell you the truth,” Birkin said. “But Tata’s a guy whose made billions, and he must have some ideas to turn it around.”

It probably helps the British attitude that Tata is no stranger to preserving British brands. The company owns Britain’s biggest steel firm, Corus, which includes the former British Steel, as well as Tetley Tea, which British observers note with some satisfaction was not merged into Tata Tea, the largest tea manufacturer in India.

“The media like to call it the empire striking back. But I think there’s more to it than that. There’s a lot of evidence in international business research that companies will go to countries that are close to their own countries, close being defined broadly either in cultural terms or historical terms,” said Ravi Ramamurti, director of the Center for Emerging Markets at Northeastern University.

Ford loses fans

In 1989, most British car enthusiasts saw Ford’s purchase of Jaguar as a lifesaver that averted the brand’s near-certain extinction under British ownership. The latest top-end models executed under Ford management have been widely celebrated: The new XF, with its 2.7-liter, V6 twin-turbo diesel, was named Car of the Year 2008 in Britain’s What Car? awards.

The critical successes came at the tail end of years of lackluster financial performance and Ford’s ill-fated experiment with its X-type introductory-level luxury car -- an endeavor that produced the unlikely specter of a Jaguar station wagon. It was celebrated by reviewers as a “city-friendly grocery-getter” or, more predominantly, the “dog’s breakfast.”

Peter Cooke, KPMG professor of automotive management at the University of Buckingham, said that Ford “damaged the brand.”

“This is being dreadfully English and cynical, but a Jaguar is an aspirational product by definition. In the U.K. market, you don’t want to see your hairdresser driving a Jaguar,” he said.

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Land Rover prospered under Ford, with worldwide sales rising 18% last year as Jaguar’s shrank by a similar proportion, but cash-hungry Ford wants to sell both. The automaker lost $2.67 billion last year and $12.6 billion in 2006, and recently unloaded Aston Martin, another premier British brand, to a Kuwaiti-funded investor group for $848 million, keeping a $77-million stake.

Under the complex ownership-sharing agreements being hashed out with Tata, Ford is expected to continue supplying engines for Jaguars -- a provision that guarantees, over the next few years at least, not only the jobs of 16,500 workers at Ford plants but as many as 40,000 others in the companies that provide components.

More classically British

Tata would maintain British management teams and three existing production plants in Birmingham and Liverpool, as well as two engineering and design studios.

And both Jaguar and Land Rover could wind up a lot more classically British than they ever did under Ford.

“What attracted us was the fact that these are two iconic brands, global in nature and highly respected for their products,” Ratan Tata said in an interview with Autocar magazine. “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.”

Tata could succeed where Ford faltered by concentrating less on volume and more on restoring Jaguar’s allure as a car people spend the first part of their lives dreaming about owning and the rest of their lives paying for. A new XF typically costs upward of $49,000, and Jaguar’s supercharged V8 coupe, the XK, can command more than $86,700.

Ford, Cooke said, “didn’t have time to stand back and say, ‘What’s this wonderful beast we’ve got here?’ Ford tried to milk the brand without putting the investment in.”

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Tata could help reverse Jaguar’s flagging sales not only by taking the brand back upmarket, but also by exploring affluent new markets in Eastern Europe and Asia.

The Chinese, according to Cooke, will buy 10 million cars in 2010 and twice that in 2020, with many new buyers choosing mid-size and luxury models for their first cars. General Motors Corp. sold more Buicks in China last year than it did in the U.S. India is behind China but growing phenomenally.

As it is, Tata has a foothold in the automotive industry with the Indica, the second-best-selling car in India last year. This year, the company has introduced what is billed as the world’s cheapest car: the Nano, a diminutive four-seater, also known as the People’s Car, that will sell in the East only for the moment, for about $2,470. Tata is also the nation’s largest truck maker.

The company’s positive track record with British acquisitions were factors in the strong support for Tata’s bid from British unions. The labor groups had frowned on competing bids from private equity funds, including one represented by former Ford CEO Jacques Nasser, “because of their record of slash and burn, of closing the plants and loading the companies with debt,” said Dave Osborne, automotive national secretary for the British umbrella union Unite.

As markets grow in places like Russia and China, he said, Tata wouldn’t rule out moving some manufacturing eastward, “but those would be in addition to the British plants, not as substitutes.”

From Tata’s side, access to British plants, engineering and supply networks will allow a company stuck in Nanos to shave years off its graduation into sedans.

“They’re cutting down on that 10-to-15-year gap of their going forward,” said Amit Kasat, an auto industry analyst with Motilal Oswal in Mumbai. “It’s very much clear that they want to take the Tata brand globally. This is another step.”

Capital reverses course

The soon-to-be-completed deal reflects another important reality of the relationship between Britain and its foreign colony: India is now the second-biggest source of foreign investment in Britain, at $104 billion a year.

The growth in the pipeline has been predominantly east to west. Not only British investors but also Indians have had to look elsewhere to invest their capital because of continuing problems with corruption, bureaucracy, infrastructure and a highly regulated labor market.

With the opening of its economy over the last 15 years, not only has India seen significant inward investment but a rising cadre of world-class Indian companies are also investing outside, said Razeen Sally, senior lecturer in political economy at the London School of Economics.

“The positive story is that this is good news about the Indian economy, which not many people would have predicted going back to, say, 1990,” Sally said. “But there is a not-so-positive side to this story is well. One reason Indian companies are investing so heavily abroad and buying up assets pretty expensively is because of a lack of investment opportunities, and investment disincentives, at home.”

Also, it seems, because at least one Indian loves automobiles: Ratan Tata is said to be mulling over a stake in Ferrari.

“I have always had a personal passion for cars,” he told Autocar. “It’s a more exciting business than others, because the products have a far greater emotional attachment for their owners.”

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kim.murphy@latimes.com

henry.chu@latimes.com

Murphy reported from London, Chu from New Delhi.

Times staff writer Ken Bensinger in Los Angeles and researcher Shankhadeep Choudhury in Kolkata contributed to this report.

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(BEGIN TEXT OF INFOBOX)

History of Jaguar

1922: William Lyons and William Walmsley establish the Swallow Sidecar Co. in Blackpool, England, building motorcycle sidecars.

1928: The company moves to Coventry and begins making car bodies for other manufacturers.

1931: The company produces its first car, the SS-Swallow Sports.

1933: Walmsley resigns and a new company, SS Cars Ltd., is formed with Lyons as chairman.

1935: The first Jaguar, the SS Jaguar 100, is introduced.

1939-45: During World War II, the company ceases car production to build and repair military planes.

1945: Due to the Nazi connotation of the term “SS,” the company changes its name to Jaguar Cars Ltd.

1951-57: Sleek Jaguars dominate world car racing, winning five times at the Grand Prix at Le Mans, France.

1960: Jaguar buys Daimler Co. (unrelated to Daimler-Benz), doubling its number of employees to 8,000.

1966: Jaguar merges with British Motor Corp., which later is folded into British Leyland Motor Corp.

1972: Lyons retires.

1985: After languishing as part of British Leyland, Jaguar Cars Ltd. is spun off as an independent company.

1990: Ford buys Jaguar for $2.9 billion.

2007: Ford announces plans to sell Jaguar.

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Times research by Scott J. Wilson

Los Angeles Times


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