Mumbai-based Tata Motors, owners of luxury brands Jaguar and Land Rover (JLR), has signed an agreement with Chase, a part of the JPMorgan Chase & Co, to offer the full range of automotive financial services to its customers and dealers.
Under the arrangement, Chase will take up all Jaguar-Land Rover’s consumer financing activities in the US from January 1, 2009. It will thus replace Tata's earlier arrangement with Ford, whose financial arm provided support after the takeover.
According to Tata Motors officials, about 35-36 per cent of JLR branded cars and sports utility vehicles are sold on credit aided by two financing firms, one each in the US and Europe.
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Ford Motor Credit Co, the vehicle financing arm of the world's third largest car-maker Ford Motor Company, had agreed to continue financing JLR vehicles for one year starting April this year.
Similarly, Tata Motors had tied up with Fiat Group Automobiles Financial Services, the vehicle financing arm of Italy-based Fiat SpA, to offer financing solutions to JLR buyers in Europe.
Tata Motors' agreement comes at a time when the US market is facing a steep credit crisis forcing many buyers to postpone purchases. Top local lending institutions had stopped giving loans for automobile purchases due to the credit squeeze.
The current US slump in demand for cars and SUVs is the worst in the last 15 years, according to experts. According to Tata Motors, during the three months period ending September, both the brands recorded a fall of almost 12 per cent in sales.
However, Jaguar saw a successful introduction of Jaguar XF. The brand sold 20,613 units in the June-September 2007 period.
Land Rover, which makes sports utility vehicles, saw a sales drop of 20 per cent to 60,896 units as against 76,283 units sold in the corresponding period of the last year.
Tata Motors has reiterated that the prospects of sales growth look buoyant in the long term as it will explore relatively newer markets such as Russia, China and West Asia.
Although the company is already present in Russia and China, the numbers are largely limited due to restricted entry into these market. The company said that it will expand its reach in these regions in the near future as the demand has risen considerably.