After Tata Takeover, Jaguar Land Rover Regains Luster

Prashanth Vishwanathan for The New York Times

A customer looks at the Range Rover Evoque models at showroom in India. Sales of the Evoque have helped Tata Motors.

MUMBAI, India - This summer, Jaguar Land Rover cranked up production to 24 hours at its plant near Liverpool, England, adding 1,000 jobs to help meet demand for its hot-selling and acclaimed Range Rover Evoque. Now, the company is readying the release of its much-anticipated Jaguar F-Type roadster.

Four years after being bought by an Indian company, the well-known but somewhat faded British brands are regaining some of their lost luster, racking up big sales from Shanghai to London.

The success has stunned analysts and investors, many of whom had said that , the Indian auto company, was making an expensive mistake when it acquired Jaguar Land Rover from for $2.3 billion in June 2008. At the time, was raising money to ensure its own survival, and it sold the brands for several billion dollars less than it had paid to acquire them years earlier.

Analysts say Tata has done what few companies from emerging markets have been able to do - turn around and successfully run a troubled Western company. Many others, including Tata Motor's sister company Tata Steel, which paid $11.3 billion for Corus Steel in 2007, have struggled with acquisitions made in Europe and the United States in the era of cheap money before the financial crisis.

Tata Motors appears to have succeeded in large part because it did not seek to run Jaguar Land Rover from Tata headquarters here. Instead, it has left day-to-day management in the hands of executives in England. It also benefited from projects started under Ford ownership, including the Evoque, which has won fans, including the exacting hosts of the BBC show “Top Gear” and the Chinese nouveau riche.

In its last fiscal year, which ended in March, Jaguar Land Rover posted a 27 percent jump in retail sales, to 306,000 vehicles, and became the primary driver of growth and profit for Tata Motors. The Indian car and truck business of Tata has stagnated in the same time because of a slowing domestic economy and a weak product lineup that includes about a dozen passenger cars. Sales of Tata cars were up an anemic 4 percent in the previous fiscal year.

Analysts said that barring a global economic recession, they expected Jaguar Land Rover to continue to do well because it was about to release several new models, including a redesigned version of its flagship Range Rover and the F-Type.

“I think people were a bit skeptical and snobbish and maybe had some old colonial hangover,” Tim Urquhart, a senior analyst at IHS Automotive in London, said about the initial doubts about the acquisition. But he added, “If you look at Land Rover and Jaguar now, they probably have the strongest product line in their recent history if not ever.”

Tata's takeover of Jaguar Land Rover did not always look promising. The financial crisis hit soon after the deal closed, and demand for luxury cars tumbled in Europe and North America - its two biggest markets. Struggling with a $3 billion debt it took on to pay for the deal, Tata Motors was forced to put more money into the company after it failed to secure financial aid from Britain.

Many analysts questioned whether the company paid too much and extended itself too far, speculating that its chairman, Ratan Tata, a car buff and scion of the family that built the Tata group of companies, had become too enamored of buying global brands. Over the years, the group has acquired Tetley Tea, the Pierre Hotel in New York and Daewoo Commercial Vehicles in South Korea.

“The acquisition has worked because the investment has been carefully targeted and effective,” Phil Popham, global operations director for Jaguar Land Rover, said in a written response to questions. “Our growth is supported by a disciplined financial plan involving tight cost controls and targeted investments.”

Analysts and competitors credit the turnaround to Tata's financial reserves, which helped it weather tough times, and its wisdom in granting autonomy to managers in England.

“What has helped is that Tata had staying power,” said an executive at another auto company who asked not to be named because he did not want to speak publicly about a rival. “And Tata adopted a hands-off policy.”