Tata's purchase of Land Rover and Jaguar looks a pretty good outcome for most people. It secures 16,000 jobs in the West Midlands and Merseyside for the next few years. It beefs up the pension funds of the two marques, thanks to a $600 million (£298 million) injection. It gives Land Rover and Jaguar dealers financing support for the next 12 months. It gives car nuts the reassurance that the heritage will be preserved for at least a while longer. And it frees Ford to concentrate on its core business of volume car production and allows it to draw a line under its disastrous move upmarket.

Companies rarely undertake crash investigations into deal disasters, but Ford's 1989 purchase of Jaguar and 2000 acquisition of Land Rover look to have been absolute stinkers. The US corporation has halved its money over 19 years, but the lost opportunities and management distraction must make the real price tag considerably higher for Ford.

Harder to fathom is what's in it for Tata itself, which is spending heavily upfront. On top of the £1.15 billion purchase price, it is planning to outlay up to another £1 billion in developing and promoting new models.

If there is a single lesson from Ford's ownership, it is that these businesses cannot be successfully scaled up. Any attempt to boost sales beyond a certain point dilutes the brand. Niche businesses they are going to remain. There may be some technology cross-over back to the volume car business in India. Ultimately production may be pulled back to low-wage India.

It would be foolish to underestimate Tata, which grapples with businesses as diverse as tea, steel, hotels and financial services. Its conservative, paternalistic and long-term philosophy has paid dividends in the past. But it has much to do to persuade sceptics this is not a vanity purchase.

patrick.hosking@thetimes.co.uk

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