Tata Motors cash infusion for Jaguar-Land Rover could reach $1B

When the automotive subsidiary of Indian mega-conglomerate Tata Motors took over Jaguar-Land Rover earlier this year, many feared for the brand's future. Since then, Tata Group chairman Ratan Tata has taken great pains to reassure fans of the two carmakers that all would be well. Yesterday it was revealed that Tata will be infusing Jaguar-Land Rover's operations with "tens of millions of pounds" as the weak market takes its toll on sales, but today reports emerged that the tally could reach upwards of $1 billion.

The new information, originating with India's Economic Times, indicates that the cost of revamping Jaguar and Land Rover's operations and brand images could rise beyond $1 billion in the short term. That's not surprising considering the $2.3 billion purchase price paid for the two companies in March and the hundreds of millions invested by Tata since then.

The initial report of Tata's support of its newly acquired British luxury marques came by way of the Financial Times. So far talk of British governmental support has not come to any realization of aid for the industry within the country, but the possibility for help does remain. The UK government has chosen two firms to look into Tata's financial data in preparation for a possible bailout.

Tata is itself insistent that its own ability to aid the company should not be a stumbling block to government aid for Jaguar and Land Rover, especially since it has already invested heavily in the two companies since it purchased them from Ford earlier this year.

Britain's government has a definite stake in aiding Jaguar-Land Rover, since over 15,000 workers are employed by the company and the manufacturing and supply operations they staff are considered central to the strength of the West Midlands economy. The UK's business secretary, Lord Mandelson, has previously said there will be "no open check book" for troubled industries in the UK, though insiders think he may be carve an exception for Jaguar-Land Rover.

"They [Jaguar-Land Rover] have owners who are well-resourced, who have the first responsibility for sustaining the companies that they own in existence and in production for the future," said Mandelson.

The news of the cash infusions comes on the heels of a series of layoffs spurred by an aging model line at Jaguar and plummeting demand for Land Rover's SUVs.