A few months after India's Tata Motors acquired Jaguar and Land Rover from Ford Motor Co. in 2008, the global economy imploded. Chairman Ratan Tata remembers some critics at the time saying: "You stupid people ... you will bankrupt your entire group."
He admits to some anxious moments, but these days Tata, 74, says he is confident about the future of Jaguar and Land Rover. Tata Motors wants to increase the brands' sales by moving into new premium segments. But Ratan Tata says Tata Motors won't repeat what Jaguar did in the 1990s -- offering a small sedan that does not feel like a true luxury car.
Tata has been chairman of his family's Tata Industries Ltd. since 1981. Besides the automaker, the group owns the Tetley tea maker and the Ritz-Carlton chain of luxury hotels, as well as several high-technology businesses. The group's annual revenues were more than $100 billion in the fiscal year that ended March 31.
Tata was born in India and earned a degree in structural engineering from Cornell University in New York. He will retire as chairman when he turns 75 in December.
He was interviewed this month by Staff Reporter Diana T. Kurylko at the grand opening of Prestige Jaguar Land Rover Paramus, a dealership in Paramus, N.J.
Q: In five years, where will Jaguar and Land Rover be in the luxury market?
A: Jaguar Land Rover collectively is a company that will be far more visible in the international market for the premium class products and a company that would continue to hold to the heritage that they have had. And if you ask me what is that heritage, to some extent it is the connection to speed and racing cars -- not necessarily being in racing but being racy cars. So we want fast cars that are understated but attractive and have the sophistication and the use of materials that England has been known for in their cars -- like leather, very nice wood and wood accents. It would have a larger volume because it would have a larger portfolio of products.
How much larger can the brands grow?
I hope we would be less of a niche player but that we would still obviously not be catering to all customers. We would make stronger statements in the segment.
Under Ford ownership, the target was 400,000 vehicles annually for the two brands. Of course, Jaguar had a volume product -- the X-Type -- that was based on the Ford Mondeo.
Without getting to the numbers I would say whatever Jaguar or LR did, it should be something that the buyer of that car felt was a premium car -- not the kind of car that he would get in a Hertz rental car. It would be a car that he would be proud of. And if we could generate volumes like some others, like BMW or Audi or such, we should be very proud of what we achieve. I don't think it's 400,000 or 500,000 that counts. It is the quality car in various segments in the premium class.
Do you need to get into more segments?
For example, BMW has something in the 7-series segment, in the 5-series segment and the 3-series segment -- which is probably a volume car for BMW but not a volume car for Volkswagen in terms of numbers. It is that kind of differentiation [we seek]. We are in the premium segment but we would not be in the mass segment.
Today a 3-series buyer doesn't get the feeling that he is buying a cheap BMW. He feels that he got an aspirational car and he has got a BMW. We should do exactly the same. At no stage should it be conceived of as a Mondeo in another garb.
The company has been thinking along those lines. It hasn't been, "How can we get a car to sell 400,000?" It has been, "Can we create an entry-level car that is a Jaguar?"
Was buying Jaguar and Land Rover the right decision?
We have really been happy with that acquisition. What did happen from the outside is after we acquired the company, two or three months later, we had the financial collapse ... and everybody said: "You stupid people who would go and acquire this company that is already struggling and you will bankrupt your entire group as a result." It looked a little scary at that time. But it's completely changed. People are not saying we are smart, but they aren't saying we are stupid, either.
You put a lot of money into the company, too.
Yes we did -- with particular reason. If we had not put money into it, the company would have amputated itself in many ways to stay alive. And one of the ways it would have stayed alive was to cut new product development. The one thing we did with the money we pumped in was to make sure the product development plans would continue.
Volvo, which also was owned by Ford, doesn't have nearly as many new products today as it did before it was sold.
The new Volvos are good and nice cars and interesting cars, but it looks like they just have one product. We hope that Jaguar and Land Rover will have several products that are in the pipeline today.
What does this new dealership in Paramus represent for Jaguar and Land Rover? Does it cement what Andy Goss, CEO of Jaguar Land Rover North America, has been pushing for -- dealerships that combine both brands?
Yes. What I sense today is this dealership is a fresh look at how cars can be retailed. You don't retail cars, but you feast your eyes on them, you touch and feel them and you let your passion result in a purchase. This has a wonderful way of getting that kind of view across. This is a very successful implementation of a dealership -- maybe the way things will have to be in the next few years.