Ford yesterday chose Tata Motors, the carmaking arm of the Indian conglomerate, as preferred bidder for its Jaguar and Land Rover units.

The American carmaker said it was pursuing “focused negotiations at a more detailed level” with Tata.

Mahindra & Mahindra, another Indian car maker, and One Equity Partners, a US-based private equity group, have also submitted bids for the marques. The three bids are thought to range from $1.5 billion (£760 million) to $2 billion.

“There is still a considerable amount of work to do, and while no final decision has been made, we will proceed with further substantive discussions with Tata Motors over the forthcoming weeks with a view to securing an agreement that is in the best interests of all parties concerned,” Lewis Booth, executive vice-president of Ford’s European units, said.

Tata was perceived as the front-runner after winning the backing of British unions concerned about safeguarding 15,000 direct jobs. Union leaders fear a private equity buyer would be forced to strip out costs in the weak credit environment.

Ford also regards the Indian group as a long-term owner that will invest in Jaguar and Land Rover, both of which have been hit by unfavourable exchange rates and high production costs in Britain.

Jaguar, bought for $2.5 billion in 1989, has particularly struggled under Ford’s ownership. Employees in Britain were told of the development yesterday morning.

The US car giant is selling the marques to help it to return to sustained profitability by next year. Last year, it sold a controlling stake in Aston Martin to a Kuwaiti-led consortium for $931 million in cash and shares.

If Tata is successful, it will be the first time an Indian company has bought a Western car manufacturer. It will represent another coup for Rata Tata, the driving force behind an international buying spree that includes Corus, Tetley, Daewoo’s commercial arm and the Ritz-Carlton hotel.

Tata, which last year bought Corus for £6.2 billion, has a reputation for leaving incumbent management in place after acquisitions.

Mr Tata, who is also pioneering the world’s cheapest car to be unveiled next week, told The Times last month that Tata did not “create a trauma” within the companies it bought.

“Tetley looks very much like it did. Daewoo has the Korean management. It is still the Corus managers on the shopfloor and the workers,” he said. “Boundaries of nationality no longer bring with them a change of culture,” he added Tata, founded by Jamsetji Tata in 1868, is leading an expansionist charge as cash-rich Indian companies with global aspirations look to buy brands outside their domestic market.

“As a matter of pride we might run our flag up the pole but that is not the motivation for it,” Mr Tata said. “Wherever we have made an acquisition it has been for a strategic reason not for ego, size criteria or wiping out a competitor.” A Tata Motors spokesman yesterday said: “We have had positive discussions so far with Ford concerning the possible purchase of Jaguar Land Rover.

“We hope both parties can reach an agreement in the forthcoming weeks, though these are complex discussions and there is still much work that needs-to be done before that position is reached.”

Times Recommends

• Gazprom brands Ukraine 'a barbarian' in gas row
• Services sector raises fears over UK jobless
• Retailers surge as profits survive sales plunge