Tata struggles with the Jaguar and Land Rover brands

Tata struggles with the Jaguar and Land Rover brands

Tata Motors Ltd.’s purchase of Jaguar and Land Rover caught the auto industry by surprise. As far as the water cooler talk surrounding the purchase was considered, a familiar question was repeatedly asked: How can a truck-maker from India end up buying two of the most luxurious brands in the world today?

Now, it seems that the purchase has come back and turned the tables on the Indian truck giant.

For the first time in seven years, Tata has posted a consolidated net loss of over 25 billion rupees ($520 million) from the period of April 2008 up to March 2009. This, of course, is a stark contrast from Tata’s performance a year ago when it made a net income of 22 billion rupees.

The culprits for this unfortunate about-face in company fortunes lies in the plummeting sales of the industry’s luxury car segment as to which both Jaguar and Land Rover are staples. For one, Land Rover sales fell to 120,000 after selling a little under 200,000 units the year before. Similarly, the sale of Jaguar vehicles met a similar fate, falling to 47,000 units from 50,000 the previous year.

Continued after the jump.

Source: Bloomberg

It seems unfair to single out these two brands for their mediocre performances because the ongoing global crisis has been a major cause – if not THE major cause – for the fall of the auto industry.

Tata’s purchase of Jaguar and Land Rover, surprising as it was, came as a bold step for the Indian truck-makers to be recognized the world over as a serious player in the global automotive industry.

One year later, Tata’s moment of glory would have to wait, at least for a little while longer.

But despite the mounting losses Tata is expected to take this year, the company understands the challenges involved in rebuilding both Jaguar and Land Rover. The most obvious challenge, apart from selling the cars, of course, is channelling the resources to work on two brands known for their marquee status and high-end technology when the company has been used to producing low-maintenance cars with a just a few basic technologies.

It’s safe to say that the acquisition of Jaguar and Land Rover hasn’t paid dividends the way Tata had hoped.

But with the way things are going with the economy, Tata can take comfort in knowing that they’re not the only ones that have been put in the same predicament.


2 comments:

22 billion rupees net loss is not a joke. However, I don’t know what’s running in the mind of Tata for buying the Jaguar and Land Rover. And does it mean that Tata will focus in making production of cars more than their original business-truck?

I would say that when it comes to truck i would prefer Land Rover..

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