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Can the world's cheapest car help the UK's luxury auto sector?

By Marc Reeves on Mar 23, 09 04:53 AM in

It seems an odd connection at first.
A heap of steel wrapped around a 625cc engine that constitutes a car with a top speed of 65mph is about as far away on the auto food chain as it's possible to get from the sleek and supercharged Jaguar XK.

But this modest little motor, aimed squarely at the emerging middle classes of India and other developing countries, could well be the most vital component in the ongoing saga that has surrounded Jaguar Land Rover since Tata bought the company exactly a year ago.
Not by its direct contribution to the coffers of Tata (although that could be huge in the long term), but by the opportunity it provides for chairman Ratan Tata to give UK doubters a reason to back JLR's plea for help from the goverment.
Last year, no sooner was the ink dry on the contract between Ford and Tata - and a $2 billion bridging loan in place to finance the deal - than world demand for cars fell off the cliff, and those nice bankers started helpfully admitting they hadn't a clue how money worked.
JLR has since been at the centre of the debate over how and what help should or shouldn't be provided by the UK government to the car industry. What hasn't always helped is the impression that Tata are some kind of distant global megacorp with bottomless pockets who only need to throw some loose change in Gaydon's direction to get Lord Mandleson off the hook.
Throw in some borderline racism in the tone of some of the early coverage of the crisis in the national press, and you see the extent of Tata and JLR's PR problem.
Fortunately, JLR's calm and understated chief exec David Smith has played a crucial part in turning the tide in the UK through a well paced lobbying campaign in the media and Whitehall, but the challenge remains for Tata itself to woo the opponents of aid for JLR. They need to show that while they are indeed a massive business, they are not, of course, immune to the global downturn (Tata shares are down more than 70% since last year).
Tata's new car launches today in Mumbai, and the whole country has, frankly, gone Nano-mad. It's already been declared an event every bit as significant in the history of affordable motoring as the launch of Alec Issegonis's Mini.
In a series of set-piece briefings and launch events today, Ratan Tata and Tata Motors chief Ravi Kant will be proudly showing off the world's cheapest car to the global media. I hope they don't miss the opportunity to show similar enthusiasm and commitment to Jaguar Land Rover. It could be just the signal that Lord Mandelson needs to finally give the green light to the assistance JLR needs.

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