Tata’s premium marques shun volume race

Jaguar and Land Rover are happy with their niche as smaller premium manufacturers, and have no aim to match the large sales volumes being reported by Germany’s luxury carmakers, according to the chief executive of the Indian company that owns the two UK brands.

Carl-Peter Forster, chief executive of Tata Motors, said that JLR, which returned to profit this year after a deep sales slump during the financial crisis that stretched its owner’s finances, would be a “sustainable cash generator” for years to come.

BMW, Mercedes-Benz and Audi are reporting expanding sales and profits this year, led largely by their expanding businesses in China. BMW, the world’s largest premium carmaker, sold 1.29m vehicles in 2009.

Jaguar and Land Rover, which sell fewer than 250,000 vehicles between them, think they can be sustainably profitable as a smaller premium producer, like Porsche. The German sports car maker sold 82,000 cars last year.

“I will not enter into a volume race,” Mr Forster said.

“It is very fortunate that we are not doing 1.2m cars, because at least one-quarter of the time we would be debating: ‘When do we overtake X or when will we be overtaken by Y?’ We would enter that race to be the biggest premium manufacturer in the world.”

Mr Forster also dismissed the notion that JLR might need to join a rival carmaker in an alliance, such as the one Mercedes’ owner Daimler formed this year with Renault and Nissan to develop small cars, vans, engines and electric cars.

“Synergies are the most overrated fundamental principle in our industry”, he said. “We are at 250,000, and can go to 300,000-plus. That is sufficient volume to be a premium player.”

Mr Forster, a German, became Tata Motors’ chief executive in February after running General Motors’ Opel/Vauxhall, where he supported a failed bid by Canadian and Russian investors for the US carmaker’s European arm.

He now divides his time between Mumbai and JLR’s operations, which have their headquarters in Gaydon, England.

Last month JLR announced a deal endorsed by unions to adopt a more flexible work regime at its two West Midlands plants, in exchange for an agreement by Tata to shelve a plan to close one of them.

Tata Motors is India’s largest truckmaker, and has a small but growing cars business best known for the low-cost Nano.

The Indian group, after paying Ford Motor $2.3bn for Jaguar and Land Rover in 2008, had to pump more than £1bn into the brands to cover losses during the credit crunch.

JLR, which employs about 16,000 people, shed about 2,500 workers during the downturn. In the quarter to the end of September, JLR reported a net profit of £238m ($372m) as the two marques’ sales revived. It is now hiring more than 1,500 additional staff.

JLR generates about half of Tata Motors’ revenues, but the Indian group has taken a hands-off approach to managing the operation.

Tata and JLR are studying some limited areas where they can co-operate, including possible development of four-cylinder engines.

Mr Forster said that he was looking at areas where “the upper end of Tata and the lower end of JLR” could co-operate. However, he denied there were any plans for a Jaguar-badged Nano.

“This you will not see”, he said. “I can definitely rule that one out.”