A member of the Tata Group, India's largest conglomerate - making everything from steel to tea - Tata Motors current product lineup is built upon a backbone of work trucks and affordable, mass-market cars. Purchasing Jaguar and Land Rover would not only give the auto maker entry into myriad global markets. Acquiring the legendary British marques so soon after establishing independence from the UK would be a huge boost to Indian national pride.
Home market sales account for 90% of Tata's revenue at present. Tata has mastered volume sales, and is currently developing what is being billed as the world's least expensive minicar, due in 2008. However, the maker is seeking to move into other markets where such inexpensive cars offer not only comparatively poor performance and cheap interior materials, but may not be able to pass stringent safety tests. An infusion of ready-made platforms, technology, and experience from Jaguar and Land Rover may be just what the Indian giant needs to break into global auto sales.
On the other hand, the lack of corporate and brand synergies between Tata and its intended acquisitions is so great that industry analysts are calling the purchase a mistake. Indian auto parts makers do not have the technical capability necessary to support production of luxury automobiles, meaning Tata could not likely benefit from lower wages and materials costs by producing the cars in India. Importing parts for production would drive costs up, and outsourcing production would be even more expensive. It seems that if the deal does go through, it will be more on the basis of passion than prudence.