Indian automakers close in on Jag and Land Rover

Ratan Tata, Chairman of Tata Motors and Anand Mahindra, vice chairman of the Mahindra Group

Anyone who didn’t consider India’s Tata Motors and Mahindra & Mahindra serious bidders for Ford were wrong. The two rivals — both revving with global ambitions — are now short-listed in the contest, together with One Equity Partners.

And the deal could come cheap. Jaguar and Land Rover are estimated to have some $2 billion in pension liabilities each, so Ford actually may have to pay a buyer to take Jaguar and Land Rover. Ford wants to sell the two as a package.

Of course, fixing Jaguar won’t be a joy ride. The company has been losing money for 20 years. And then there is Jaguar’s stab at a modern new design language with the XF, which has horrified some traditionalists. But Land Rover offers the Indian automakers design, research and manufacturing expertise smack in the middle of Europe, and a premium brand to boot. Mahindra is already planning to storm the US market in 2009 with an SUV, and two-and-four-door pickups. And though Tata is set to unveil its one-lakh ($2,500) car in January, it too is determined to go up market.

A deal is expected by yearend. If Tata or Mahindra end up in the driver’s seat, get set for a faster ride into western markets.

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