Ford Motor has narrowed the auction of its Jaguar and Land Rover brands to three bids, two of them involving Indian companies, people familiar with the matter said Monday.
Indian carmaker Tata Motors as well as rival Mahindra & Mahindra, which has teamed up with buyout firm Apollo, are both set to make third round offers for the British luxury brands.
One Equity Partners, a buyout firm funded by JP Morgan , is also on the list, the sources said.
Ford is struggling with declining sales and a falling U.S. market share and announced last week it was nearing a deal to shed Jaguar and Land Rover. At the time it posted a third quarter net loss of $380 million, compared with losses of $5.2 billion a year earlier.
Ford has been exploring the sale of the brands since June as it continues a global strategic review which led in March to the sale of Aston Martin to a Kuwait-backed consortium in a 480 million pounds deal.
Mahindra & Mahindra, India's top utility vehicle and tractor maker, initially pulled out of the process because it was only interested in one of brands, whereas Ford wants to sell them together.
The Indian company rejoined the auction after partnering with Apollo in a break-up bid that would give each one of the brands.
Indian companies are becoming increasingly aggressive acquirers outside their home market as they seek diversification and growth.
Tata Motors, India's top vehicle maker, has a joint venture with Fiat to make premium cars for the Italian firm.
Ford invited six second-round offers earlier this month, people familiar with the matter said at the time. It has now evaluated them and selected the three parties it wants to fight for the businesses, the sources said.
One of the sources said the bidders are now expected to enter talks with trade unions and the UK government about conserving jobs amid speculation some of the bidders may try to move production outside the UK.
"We expect an agreement by early next year at the latest," a spokesman for Ford said. Ford declined to comment further.
Buyout firms TPG, Terra Firma and Ripplewood were among suitors that were expected to make second-round offers but were not on the third-round shortlist.
Merrill Lynch analyst John Murphy at the time had valued the two brands at as much as $1.5 billion combined.