Tata Motors - Welcoming wonders or troubles?

March 28, 2008 – 8:59 am

“The Empire drives back… It took a company from a former colony to come to the rescue of a beleaguered British brand”

Thus reads an article in yesterday’s newspaper. And there are two ways of looking at it. You could say Ratan Tata has got hold of two of the most admired brands or that he is welcoming an ocean of troubles. This is because the element of pride that comes with Tata acquiring the two marques (Jaguar and Land Rover) cannot just overshadow the skepticism about the company’s future plans and strategies to manage those brands.

It is really great to know that Tata Motors, India’s largest vehicle manufacturer, is now the proud owner of the iconic British brands - Jaguar and Land Rover (JLR). Tata Motors has bagged this US$ 2.3 billion deal from Ford Motors, on whose bottom-line were weighing these marques. What Tata Motors gets with this deal—manufacturing and assembly plants, R&D centre, hitech design centres and engineering facility all with an employee base of almost 16,000. The reason why Ford had to sell these brands is it wants focus on core brands and the domestic market where it has not been doing well.

Though owning two of the world’s most popular brands is a great achievement, the Indian auto major has several challenges ahead. Many wonder if the timing of this acquisition was right considering that Tata Motors has been working on two important projects, at home—Tata Nano, the people’s car and Tata’s joint venture with Fiat to manufacture vehicles in India and Thailand. The point here though may be that managing JLR business will have no direct impact on Tata Motors’ domestic business. Jaguar has been a loss making brand while Rover’s profits in the last 2-3 years have been making up for those losses, for Ford. Will these brands remain British? Will an Indian company which has never manufactured/marketed a luxury car be able to manage the challenges of high-end car business? It’ll be quite difficult for even Mr. Ratan Tata to answer these questions but this is what he had to say about his dream-come-true acquisition. “Our plan is to retain the image, the touch, and the feel of Jaguar and Land Rover. We will not tinker with the brands in any way… they are special global brands and whoever acquires them has a responsibility to nurture them and enable them to prosper.”

Tata had earlier failed to sell its Indica in the UK where it was rebranded as City Rover. How well Tata can manage the business of Jaguar and Land Rover depends on how it takes up the marketing activities. Tata could focus more on the Jaguar brand as Land Rover is already hot. The attention can be more on Jaguar’s current and upcoming models XF and XF while steering clear of its bereft X-type. Tata’s deep pockets can help the company look at expanding the distribution of these products to developing markets in the Eastern Europe, Southeast Asia, China and the Middle East – an investment strategy unviable for Ford as it already had major issues which needed strict attention.

For all the drama that has been happening and more to be unfolded in the future, one can predict that Tata Motors definitely stages a chance of transforming the Jaguar brand, considering the group’s successful acquisition record in the recent past.