Essay: Tata Motors acquisition of Jaguar Land Rover

1. Do you think Jaguar and Land Rover will prosper under the ownership of Tata Motors?
Tata Motors acquired Jaguar Land Rover at a time where the company was facing strong criticism and a backlash that negatively impacted sales performance. Indeed, Tata Motors suffered a loss of $500 million following the acquisition (Keegan and Green, 2017). Ever since, however, Jaguar and Land Rover have delivered consistent profits and increased sales. JLR has expanded its manufacturing facilities across the world, becoming global players in the luxury market and Britain’s largest automotive manufacturer, with a growing workforce of over 43,000 employees (Jaguar Land Rover, 2018). Under Tata, JLR have also engaged in several new ventures and introduced award-winning products that continuously drive sales (ibid). Tata recognised the value of the two companies cooperating in areas such as design and R&D whilst heavily investing in both and preserving their British identity (Tata Motors, 2008). As a result, Land Rover was recently named one of the best global brands in 2018 by Interbrand, with a 2% increase in brand value (Interbrand, 2018a), and in 2017 Jaguar was rated as the “most improved” brand in J.D. Power’s quality ranking (Bajaj, 2012). At the same time, Tata seems to support the forward-looking approach that JLR is taking, with its focus on the electric age and its goal of offering electric versions of all car models by 2020 (JLR, 2017). All these has allowed for JLR to become the main driver of Tata’s growth and profit (Bajaj, 2012).
Whilst it is true that Tata took on distinctive companies with high levels of brand equity and global awareness, as well as with strong projects in place initiated by Ford (Ritson, 2012), key to this success appears to be the fact that Tata Motors and Jaguar Land Rover are independently managed (Sengupta, 2019; Ritson, 2012). Indeed, the Indian parent company has always stepped back and allowed the British companies to “do their own thing” (Mundy,2018, p.1), a decision which has been acclaimed by many.
On the basis of the above, it can be argued that despite punctual declines in sales due to a challenging external environment, overall it has been one of the most profitable ventures of Tata Motors. Tata has heavily invested on JLR and has managed to grow previously troubled companies into successful global players (Bajaj, 2012), which suggests that JLR will continue to prosper under the ownership of Tata Motors.
2. What do you think are the biggest challenges facing Jaguar and Land Rover in the next few years?
Jaguar and Land Rover are likely to face several challenges in the next few years:
In the political sphere, the most prominent challenge is undoubtedly Brexit. JRL currently enjoys several benefits within the EU such as the Single Market and Customs Unions. Given its British heritage, should these conditions cease to exist, it is likely to impact the automotive supply chain on a national level, JLR business and ultimately its workforce (JLR, 2018). Other global political issues include government regulations on areas like taxes, major import-export movements, tariffs (Keegan and Green, 2017) and vehicle homologation approvals. Political instability and opposition can also affect other decisions such as where to locate factories, something that Tata experienced when developing and assembling the Nano (Ayyar, 2018).
Globalisation has undoubtedly increased the amount of competition on the automotive industry (Keegan and Green, 2017), and JLR has to outperform not only leading global companies such as BMW but also local competitors with a higher understanding of the local market and consumer needs. Their efforts to compete in the global marketplace and expand their assembly lines might negatively affect the quality of their production process. Indeed, there has been for years several issues with manufacturing defects not only in Jaguar (Keegan and Green, 2017) but also in Land Rover (Smouse and Woodyard, 2015).
Turbulent economic environments and currency fluctuations also represent significant threats (Keegan and Green, 2017) which seem to have caused periods of lower-than-expected profits and slower sales for JLR (Mundy, 2018). JLR has recently experienced declining sales in China owing to a trade war and economic slowdown which has discouraged Chinese consumers from buying luxury goods (Hotten, 2018).
Moreover, technological developments and changing consumer needs or preferences are moving the automotive industry towards electric and autonomous cars. Indeed, Land Rover’s Brand Communication Director, Richard Agnew, announced JLR’s strategic move to “ACES (Autonomous, Connected, Electric, Shared)” (Interbrand, 2018b, p.1). The deployment of this strategy represents another challenge, since it will have to be adapted to different geographical regions and its customer requirements (ibid).
The success of JLR in the face of these challenges will depend on how effectively and efficiently it can adapt to them.
3. Tata Motors recently introduced the Nano, the world’s least-expensive car. The Nano fits Tata’s strategic goal of building a low-cost car for the Indian market. Can Tata succeed in targeting both the very low end of the auto market as well as the high end?
The Nano was widely recognised as the world’s least-expensive car, but eventually it also came to be known as Tata’s “expensive failure” (Mundy, 2018, p.1). The Nano was a very smart project designed for the Indian market that in my opinion had a lot of potential but was ill-executed. The Nano’s failure lies in a misunderstood marketing strategy that focused almost exclusively on the price of the car and made it look unreliable and fragile (Able, 2014). It was positioned as the cheapest car in the world and failed to take into account that “cars in India are aspirational” (Mundy, 2018, p.1), hence no Indian consumer wanted to be associated with this car. The Nano project was sustained for a period of time despite its losses, allegedly due to Mr Tata’s emotional connection to it (ibid), but eventually its production was terminated.
The Nano exemplifies the difficulty in succeeding to target both the very low and very high-end of the auto market. This is a move that many companies attempt to make in order to grasp more segments of the global market and gain more profits. Although they are two very different markets, I believe Tata could succeed at targeting both the high- and low-end as long as it continues to manage all companies independently, Tata on the one hand and JLR on the other. This is because each company has years of expertise in their corresponding markets and benefit from clear brand positioning, which, as stated in question 1, has proven a very successful strategy. That is why I believe it could have been able to do so with the Nano with an appropriate level of investment in the project. The Nano essentially failed because Tata did not devote enough materials and resources, compared to those invested in JLR. This suggests that targeting both ends of the market is a cumbersome task that requires a lot of capital and equal investment of resources, which could be shared (along with know-how) if targeting just one end, achieving efficiencies. This might be the reason why Tata is staring to move towards the higher-end of the market along with JLR (Sengupta, 2019), using more sophisticated car offerings to change its brand perception and elevate the brand perception to premium, competing on other factors rather than price (ibid).
BIBLIOGRAPHY
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Jaguar Land Rover (2017) EVERY JAGUAR AND LAND ROVER LAUNCHED FROM 2020 WILL BE ELECTRIFIED [online] Available at: https://www.jaguarlandrover.com/news/2017/09/every-jaguar-and-land-rover-launched-2020-will-be-electrified [Accessed 8th February 2019]
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Smouse, B. and Woodyard, C. (2015) Recall: Land Rover doors can fly open, sunroofs fly off. USA Today [online] 8 July. Available at:
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Tata Motors (2008) Tata Motors completes acquisition of Jaguar Land Rover [press release] 2 June 2008. Available at: https://www.tatamotors.com/press/tata-motors-completes-acquisition-of-jaguar-land-rover/ [Accessed 6th February 2019]
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