Tata Motors Ltd. will consider a joint engine-development program with its Jaguar Land Rover unit.
"To optimize the synergistic strengths between JLR and Tata Motors in India, an examination is also under way on a joint engine development program which would have manufacturing facilities both in the U.K. and India," Ratan Tata said in a statement released in the company's annual report for the 2010-11 fiscal year, which ended on March 31.
Currently, Tata, India's leading automaker by sales, obtains engines for Jaguar and Land Rover models from the brands' previous owner, Ford Motor Co.
Joint engine manufacturing would be another step closer to establishing the brands' independence from Ford. Tata bought Jaguar and Land Rover from Ford in 2008.
Tata Motors said its Pune, India, plant, which began manufacturing the Land Rover Freelander in late May, could assemble other products and variants from the brands, according to The Wall Street Journal. A report from the Birmingham Post claims that a Wolverhampton, England, plant has been chosen for Jaguar and Land Rover engine manufacturing.
Globally, Tata Motors sold 62,090 Jaguar and Land Rover vehicles for the fiscal year, up 9 percent from the previous year, the company said.
Jaguar Land Rover N.A. sold 23,702 vehicles in the United States in the first six months of 2011, a 13.9 percent increase over the first six months of 2010.
Tata, which began discussions surrounding Jaguar and Land Rover engine development in a meeting June 30, said it is "also considering various options for assembly and localization of selected [Jaguar Land Rover] products in China."
China overtook the U.S. as the world's largest auto market in 2009 and sales this year have increased at a slower rate after surging 32 percent to a record in 2010, as the government phased out incentives and imposed purchase restrictions to curb traffic congestion.
High inflation in Asia may lead to a decline in automobile demand, Tata said. India's June car sales grew at the slowest pace in two years on rising interest rates in an economy where 80 percent of the car purchases are financed through loans.
China's passenger-car sales climbed 6.2 percent in June, reversing a decline in the previous month, the China Association of Automobile Manufacturers said on July 8.
Bloomberg contributed to this report.