A Nano bail-out
The world’s cheapest car races in to save one of the world’s most luxurious marques, writes Pramit Pal Chaudhuri.india Updated: Apr 30, 2009 01:18 IST
T here’s a cartoon of an executive telling his staff, “Due to corporate cutbacks, we’ll all have to sacrifice. Which is why my company car will be a Mercedes, instead of the Jaguar I normally drive.” This is a brand that traditionally orbits in a very high trajectory. Hence the irony of the Jaguar being saved by the world’s cheapest car, the Nano.
Remember how the head of the Jaguar car dealers’ association of the US, Ken Gorin, fretted when Tata Motors emerged as the front-runner to buy Jaguar Land Rover. “I don’t believe the US public is ready for ownership out of India,” he said, warning it would “throw a tremendous cast of doubt over the viability of the brand.”
The reverse proved true: Jaguar Land Rover threw a financial shadow over the viability of Tata Motors. Wall Street’s collapse wiped out Jaguar’s principal clientele. It also halved the value of Tata Motors’ shares, deep-sixing hopes to sell new shares to pay for the new purchase. Jaguar was now a luxurious millstone around the Indian company’s neck. The big drama has been whether Tata Motors could find money to pay a $ 2 billion bridge loan it had taken for the buyout that was due in June.
But riding to the rescue, with a price tag roughly a fiftieth of a Jaguar XK coupe, has come the Nano. While the final tally is still awaited, it is estimated that the Nano has received over 100,000 bookings and the advance payments from Indian buyers have filled Tata Motor’s coffers with over $ 2 billion. The Jaguar danger is suddenly toothless.
Nano’s biggest assist may come from its effect on Tata Motors’ share price – making it easier for the company to borrow.
The final twist to the tale is that the Jaguar Land Rover has received a £ 340 million loan from the European Union to develop more fuel-efficient models. A Nano runs roughly three times further than its sister car on the same litre of petrol. As the Worldwatch Institute has noted, the Nano is more green than the Prius hybrid.
Well, Jaguar still keeps a distance from India. Its website has no mention of ‘Tata’ or ‘India’. Its saloons will probably never say ‘Made in India’. But there’s definitely a case for them being engraved, in nanometer-high lettering, ‘Saved in India.’