Jan. 4 (Bloomberg) -- Tata Motors Ltd., the Indian automaker in talks to buy Ford Motor Co.'s Jaguar and Land Rover units, would slash years off its research and development by acquiring the luxury brands, says an investor who is buying the stock.

Ford selected Tata as the preferred bidder, putting India's largest truckmaker in a position to take over two iconic British brands. Talks will continue, the two companies said yesterday.

``It's a big bet by Tata to get global and be recognized as a global player,'' said R.K. Gupta, who manages $150 million of stocks as the chief investment officer of Credit Capital Asset Management in New Delhi. ``They can get technology, which would have taken years if they tried to do things on their own.''

Tata, which has developed only one car so far, needs new technology to compete with overseas automakers led by General Motors Corp. that are spending $6 billion to build plants and develop models in India. An overseas acquisition gives the Indian company a leap-frog into technology for cars and sport-utility vehicles that Tata can use in the local market, Gupta said.

Gupta, whose funds already own 20,000 shares of Mumbai- based Tata, plans to purchase more stock, he said.

`Considerable Challenges'

Buying Jaguar and Land Rover would give Tata a presence outside Asia and provide access to new technology. Tata began making cars in 1999 with the Indica hatchback, India's first locally designed and manufactured car. All the other cars the company sells are derivatives of the Indica.

Still, expansion overseas and into the luxury segment at the same time may be a risk, Moody's Investors Service said, as it put the automaker on review for a possible downgrade.

Tata Motors ``will face considerable execution and integration challenges,'' Elizabeth Allen, a vice president at Moody's, said in a statement.

Tata Motors fell 1.25 percent, or 9.95 rupees, to 784.3 rupees on the Bombay Stock Exchange after earlier rising as much as 2.2 percent. The stock was the second-worst performer on India's benchmark Sensitive Index last year.

Ford dropped 15 cents to $6.45 on the New York Stock Exchange yesterday, and the shares have slid 14 percent in the past 12 months.

`Further Talks'

Tata and the U.S. automaker will hold ``further substantive discussions,'' Ford Executive Vice President Lewis Booth said in a statement yesterday. Ford, of Dearborn, Michigan, may fetch as much as 1 billion pounds ($1.98 billion) from a sale, according to Cantor Fitzgerald. Ford, the world's third-largest automaker, wants to sell the brands to focus on its money-losing North American business.

Tata's bid reflects a ``new guard'' in automaking, said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Michigan. Jaguar and Land Rover are ``a signal of wealth,'' he said. ``Everybody is going to notice.''

Land Rover, which is making money for Ford under seven years of ownership, sold its first all-terrain vehicle in 1948, a year after India won independence from Britain. Jaguar, with roots in the 1920s and known for sports cars such as the 1960s E- type, has lost money for Ford since being purchased in 1989.

The talks comes less than a year after the 139-year-old Tata group, led by Ratan Tata, bought steelmaker Corus Group Plc for $12.9 billion. That made Tata Steel Ltd. one of the world's top-10 steel producers.

``These are complex discussions and there is still much work that needs to be done,'' Tata said in its statement on the Ford talks. ``We are pleased by the progress in the discussions to date.''

Mixed Sales

Ford doesn't disclose financial figures for Jaguar and Land Rover, whose biggest markets are in the U.K. and the U.S. Land Rover sold about 226,000 vehicles last year and Jaguar 60,000, spokesman Mark Truby said yesterday. U.S. Jaguar sales dropped 24 percent, while Land Rover gained 3.7 percent.

The Ford and Tata statements didn't mention other bidders. Mahindra & Mahindra Ltd., the No. 3 automaker in India behind Tata, and JPMorgan Chase & Co.'s One Equity Partners LLC buyout unit also sought to buy the units, people familiar with the bidding said in September.

Jacques Nasser, chief executive officer of Ford when the automaker tried to expand Jaguar by adding lower-priced models, is a managing director of One Equity Partners.

$2,500 Car

The Tata Group's 2006 sales of $21.9 billion were drawn from businesses including steel, power, hotels and information technology, according to its Web site.

Tata, the only Indian automaker to be listed on the New York Stock Exchange, competes in its home market against Ford, General Motors and the biggest Asian and European automakers. India is the world's second fastest-growing economy after China.

The automaker began making cars only 10 years ago with the Indica. It was established in 1945 to build locomotives and other engineering products and entered the truck market in 1954 with technology from the former Daimler-Benz AG.

Ratan Tata on Jan. 10 is scheduled to introduce a car priced at 100,000 rupees, or about $2,500.

``In the long term this potential acquisition could elevate Tata Motors from a major Indian player into a global automobile manufacturer, enlarge its operating scale, improve its technology base and broaden its product range,'' Moody's said. ``Nonetheless, the challenges in the near to medium term are substantial.''

To contact the reporters on this story: Bill Koenig in Southfield, Michigan, at wkoenig@bloomberg.net; Chad Thomas in Berlin at cthomas16@bloomberg.net.

Last Updated: January 4, 2008 07:37 EST