Brand Management - Tata – JLR: Future of the marriage


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Brand Management - Tata – JLR: Future of the marriage

  1. 1. Tata – JLR: Future of the marriage Brand Management Group Project Team (Group-8): Amit Tambi (0910004) Amith M.P. (0910006) Gopalakrishnan D. (0910021) Krishnakumar Unnikrishnan (0910033) Mukesh Sharma (0910036) Sandeep Yadav (0910054) INDIAN INSTITUTE OF MANAGEMENT, BANGALORE September 21, 2009
  2. 2. Table of Contents BRIEF OF TATA-JLR DEAL........................................................................................................2 BRIEF OF TATA.......................................................................................................................3 BRIEF OF JAGUAR-LAND ROVER.............................................................................................4 ANALYSIS OF TATA‘S & JAGUAR-LAND ROVER BRAND IDENTITY .............................................4 1. STRATEGIC BRAND ANALYSIS (JAGUAR – L AND ROVER) ..............................................................4 A. SELF ANALYSIS................................................................................................................4 B. COMPETITOR ANALYSIS....................................................................................................6 C. CUSTOMER ANALYSIS .................................................................................................... 10 2. STRATEGIC BRAND ANALYSIS (TATA NANO) ........................................................................... 10 A. SELF ANALYSIS.............................................................................................................. 10 B. COMPETITOR ANALYSIS.................................................................................................. 12 C. CUSTOMER ANALYSIS .................................................................................................... 15 3. BRAND IDENTITY SYSTEM.................................................................................................... 16 JLR VS BMW .................................................................................................................. 16 TATA NANO VS MARUTI 800............................................................................................... 17 4. VALUE P ROPOSITION (JLR & TATA NANO VS COMPETITORS) ..................................................... 18 A. FUNCTIONAL BENEFITS .................................................................................................. 18 B. E MOTIONAL BENEFITS.................................................................................................... 19 C. SELF E XPRESSIVE BENEFITS .............................................................................................. 20 APPENDIX............................................................................................................................ 21 ANSWERS TO SPECIFIC QUESTIONS............................................................................................ 21 WAY FORWARD................................................................................................................... 29 REFERENCES........................................................................................................................ 30 Tata – JLR: Future of the marriage | 9/21/2009 1
  3. 3. Tata – JLR: Future of the marriage Brand Management Group Project BRI EF OF TATA- JLR DEAL Creating history, India's top corporate Tatas in March 2008 acquired luxury auto brands – Jaguar and Land Rover – from Ford Motor for $2.3 billion, stamping their authority as a takeover tycoon. Beating compatriot Mahindra and Mahindra for the prestigious brands, Tatas on 26th March 2008 announced the deal they signed with Ford, which on its part would chip in $600 million towards JLR's pension plan. The deal was announced after protracted negotiations that Tatas had with JLR union workers. "We are very pleased at the prospect of Jaguar and Land Rover being a significant part of our automotive business," Group Chairman Ratan Tata said after making the deal public. "We have enormous respect for the two brands and will endeavour to preserve and build on their heritage and competitiveness, keeping their identities intact," he said. As part of the transaction, Ford will continue to supply Jaguar and Land Rover for differing period with powertrains, stampings and other vehicle components in addition to a variety of technologies such as environmental and platforms. Ford has also committed to providing engineering support, including Research and Development plus information technology, accounting and other services. In addition, Ford Motor Credit Company will provide financing for JLR dealers and customers during a transitional period, which can vary by market, for up to 12 months. The excerpt from the Ford‘s Annual Report of 2007 shows the assets and liabilities of the JLR operations just before the sales of the divisions to Tata Motors. The net worth of the company was estimated at $ 2.3 mn. Tata – JLR: Future of the marriage | 9/21/2009 2
  4. 4. After taking over JLR, Tata had initiated the following Cost Rationalisation initiatives in order to minimize the further bleeding of the company and improve cash flows: Single shifts and down time at all three UK assembly plants. Supplier payment terms extended from 45 to 60 days in line with industry standard. Receivables reduced by £133 million from 38 to 27 days Inventory reduced by £217m between June 2008 and March 2009 from 70 to 50 days Labour actions – targeting 2,000 agency and permanent reductions between May 2008 and December 2009. Agreement with Unions to implement pay freeze and longer working hours, which together with the labour actions above is equivalent to approximately 20% reduction in labour costs. Engineering and capital spending efficiencies. Fixed marketing and selling costs reduced in line with sales volume. Reduction in all other non-personnel related overhead costs. BRI EF OF TATA Purpose of Tata group: ―Attain leadership through business excellence in the sectors we operate in, while upholding our values and integrity, to improve the quality of life of the communities we serve‖. Vision of Tata Motors (PCBU – Passenger Cars Business Unit): ―To develop Tata into a world class Indian car brand for innovative and superior value vehicles‖. Mission of Tata Motors (PCBU): ―To be the most admired multi-national Indian car company producing vehicles that people love to buy. To create an organization that people enjoy working for, doing business with and investing in‖. Tata companies operate in seven business sectors: communications and information technology, engineering, materials, services, energy, consumer products and chemicals. They are, by and large, based in India and have significant international operations. The total revenue of Tata companies, taken together, was $70.8 billion (around Rs.325,334 crore) in 2008-09, with 64.7% of this coming from business outside India, and they employ around 357,000 people worldwide. The Tata name has been respected in India for 140 years for its adherence to strong values and business ethics. Every Tata company or enterprise operates independently. Each of these companies has its own board of directors and shareholders, to whom it is answerable. There are 27 publicly listed Tata enterprises and they have a combined market capitalisation of some $60 billion, and a shareholder base of 3.5 million. The major Tata companies are Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Tea, Indian Hotels and Tata Communications. In tandem with the increasing Tata – JLR: Future of the marriage | 9/21/2009 international footprint of Tata companies, the Tata brand is also gaining international recognition. Brand Finance, a UK-based consultancy firm, recently valued the Tata brand at $9.92 billion and ranked it 51st among the world's Top 100 brands. Businessweek magazine ranked Tata 13th among the '25 Most Innovative Companies' list and the Reputation Institute, USA, recently rated it 11th on its list of world's most reputable companies. Founded by Jamsetji Tata in 1868, Tata‘s early years were inspired by the spirit of nationalism. Going forward, Tata is focusing on new technologies and innovation to drive its business in India and internationally. The Nano car is one example, as is the Eka supercomputer (developed by another Tata company), which in 2008 was ranked the world‘s fourth fastest. "One hundred years from now, I expect the Tatas to be much bigger than it is now. More importantly, I hope the group comes to be regarded as being the best in India — best in the manner in which we operate, best in the products we deliver and best in our value systems and ethics. Having said that, I hope that a hundred years from now we will spread our wings far beyond India..." — Ratan Tata 3
  5. 5. BRI EF OF JAGUAR-LAND ROVER Mission of Jaguar: ―To create and build beautiful fast cars that bring the enjoyment and exhilaration of driving to life‖. Jaguar Cars, founded in 1922, is one of the world‘s premier manufacturers of luxury saloons and sports cars. Land Rover has been manufacturing 4x4s since 1948. Jaguar Land Rover‘s manufacturing facilities are in the UK. The Jaguar Land Rover business employs over 16,000 people, predominantly in the UK, including some 3,500 engineers. The business is a major wealth generator for the UK, with 78% of Land Rovers exported to 169 countries and 70% of Jaguars exported to 63 countries. Sales to customers are conducted principally through franchised dealers and importers. In 1989, Ford purchased Jaguar, based in the U.K., for $2.5 billion and Land Rover for $2.75 billion in 2000. Ford‘s vision, promoted by then chief executive Jacques Nasser to build a collection of luxury brands, included Austin Martin, Volvo, Jaguar, and Land Rover. The Premier Automotive Group was formed to manage these brands of luxury cars. Ford, at the time of Jaguar purchase, aimed to sell 200,000 units worldwide; unfortunately, this never happened. General Motors and BMW pursued similar paths with varying degrees of success. Similarly, Daimler attempted to expand in the U.S. by purchasing Chrysler; however, this ended miserably in 2007. Jaguar, one of the most coveted brands by Ford management, has drained capital and distracted management for years. Moreover, the losses at Ford North American operations only added pressure to under invest in the brand that is losing money. Additionally, the declining sales reflect the market‘s displeasure with the brand. ANALYSIS OF TATA’s & JAGUAR-LAND ROVER BRAND I DENTI TY 1 . St r at egi c B rand Analy si s ( Jaguar – Land R ov er ) a. S elf An aly sis Understanding “Supercars” - How Tata should handle & leverage the brands. Both Jaguar and Land Rover are amongst the world‘s most prestigious supercars. The super-car is one where brand and location of finishing the product is still coupled – and exclusive – and probably requires a unique supply chain of craftsmen to support the manufacturer. 'Supercars' - The sector where 'if you ask the price you can't afford it' and that price is almost irrelevant. Marque, exclusivity, smallish volumes globally, quality and heritage are the real driving Tata – JLR: Future of the marriage | 9/21/2009 forces in this segment. As such, the product – the super car – has to be able to match the perception in terms of quality, exclusivity, heritage and brand. Source becomes important again – Bentley cars are built in Crewe and there is a supporting industry around the plant, Aston Martin is built in the West Midlands; Maybach comes from Germany as do Porsches. Jaguar should make fewer cars and aim at an average sale price of about £50,000. There is a global market for the right kind of premium car, and that means Russia, China and India. They don‘t have to outsource production overseas — they already take some components from offshore sources, and in car-industry terms their production rates are small, so you don‘t get that much more benefit from assembling in a low-wage economy. Tata must play the ―country-of-origin‖ card. Jaguar is an English brand, not a British one. The cars should be sold as Made In England. Hence, it does not make any sense to manufacture these cars in India. So, Tata must continue improving the efficiency at the JLR plants in UK and continue manufacturing the cars there itself. 4
  6. 6. Tata will benefit from the deal in terms of gaining global recognition for possessing such brands which were a jewel of the British crown, but as we see in the next section, it will not be able to reap any benefits atleast in the next decade or two. In these brands, Tata Motors has acquired impressive engineering capabilities, substantial manufacturing facilities, (which reflect the major investments by both Ford and BMW in past years), and enormous goodwill amongst the dealer network and the Jaguar owners‘ community. There is a need to introduce a greater number of attractive products for both brands, and to re- kindle Jaguar‘s past image connected with its sports car heritage. On the other hand, as Tata has become seriously financially constrained due to the Corus deal, the JLR deal and the decline in automobile sales in the Indian market, hence Tata will not be able to pump in the finances required to revive the brand. In the following sections, we will also see that huge financial spends on R&D and product innovation are required to sustain such a luxury brand leave alone the case of reviving or even creating such a prestigious brand. Estimation of JLR’s future potential & performance JLR posted a Loss of £306mn (Rs2,400cr) for the year 2008-09. Combined sales of JLR (for June 2008-March 2009) fell 32% to 167,300 units (246,700 units in the same period last year) since the Tata acquisition. Volumes for 2009 continued to show close to 40% yoy decline in the US and Europe. JLR recorded Top-line of around £4,949mn and Operating Loss of around £115mn. JLR‘s Retail volume has shown a substantial decline of around 29.8% yoy during June 2008 -March 2009 to 146,900 units. As per the Angel Research report, we believe that JLR volume growth would be capped in the medium Tata – JLR: Future of the marriage | 9/21/2009 term owing to the significantly weakened market conditions, especially in the US and UK and the need to reduce stocks. The company accelerated measures to reduce costs and increase operational efficiency by lowering production and inventory through shift cut backs, extended breaks to employees and significant headcount reduction during the year. We expect JLR to break even only at the EBITDA level in FY2011, as TML has already initiated product rationalisation and cost cutting measures at JLR. Going forward, FY2010 is also expected to be a difficult year for TML, as its JLR operations are not showing any signs of recovery. The modeling has been done by assuming around 4% yoy decline in JLR‘s volumes to 160,608 units in FY2010E albeit followed by around 15% increase in FY2011E. But, despite breaking even at EBITDA level assuming a 15% growth in sales, the company will still be under a net loss which shows that JLR will continue to bleed and the repercussions will be there on the rest of the Tata group. 5
  7. 7. In order to revive the sales of the prestigious brand, Tata will have to spend significantly in product development which will further put strain on the bottomline while the rewards may come only after 5- 10 years. Hence, atleast in the next decade JLR will continue to bleed. It may make money for Tata after that if the group chooses to invest heavily in reviving the brand. But, if it chooses so, even Tata group will have to bleed for a decade or so. Tata – JLR: Future of the marriage | 9/21/2009 b. C omp etit o r An aly sis US and Europe are the major market for luxury brands of cars. BMW is a leader in the luxury vehicles segment and has the range of vehicles which compete with the Jaguar cars and the Land Rover SUVs. Europe is a bigger market for both the luxury brands with both of them selling almost twice the number of cars in Europe as compared to their respective sales in the US. BMW has been consistently and significantly outselling JLR for more than last 10 years. BMW sells around 6 times that of JLR. The sales figures for the last 10 years for both the brands (in these areas) are as follows: 6
  8. 8. US Sales 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 BMW Cars 131559 153658 162703 172505 189290 200144 190250 197833 216343 230535 195085 BMW SUVs 1312 26720 40622 42742 40715 63109 68367 58089 63260 54028 MINI total 24590 36010 36032 40820 39171 42045 54077 Land Rover 21422 BMW Total 152981 154970 189423 213127 256622 276869 289391 307020 313603 335840 303190 Jaguar 22503 35039 43728 44532 61204 54655 45875 30424 20683 15683 NA Land Rover 29380 27148 27204 40987 39035 35506 46175 47774 49550 NA JLR Total 22503 64419 70876 71736 102191 93690 81381 76599 68457 65233 NA Europe Sales 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 BMW 450811 485130 499278 517797 513151 510859 574067 632400 670402 690177 660667 Mini 24762 105713 116147 123551 128519 113655 143997 142839 Land Rover 65499 BMW Total 516310 485130 499278 542559 618864 627006 697618 760919 784057 834174 803506 Jaguar 21981 31124 34254 41866 51308 48679 59081 45961 40598 32481 35924 Land Rover 81658 77689 74883 72287 70973 70474 76771 83144 100466 70411 JLR Total 21981 112782 111943 116749 123595 119652 129555 122732 123742 132947 106335 350000 US sales (nos.) 890000 Europe sales (nos.) 790000 300000 690000 250000 590000 200000 490000 390000 150000 290000 100000 190000 50000 90000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 BMW USA JLR USA BMW Europe JLR Europe The competition is so fierce that both the companies try to demean the other‘s products through direct counter advertisements also. The sample advertisements are shown below: i. BMW advertisement demeaning Jaguar Tata – JLR: Future of the marriage | 9/21/2009 7
  9. 9. In the above advertisement of BMW, the symbol of leaping jaguar animal has been shown as if it is running away because of getting scared by BMW. ii. Jaguar advertisement demeaning BMW-M5 The above advertisement of Jaguar has been similarly pitched to show sympathy to BMW buyers for purchasing a car supposedly inferior to Jaguar. Comparison of Jaguar vs BMW cars As per Compact exec group test of Audi vs BMW vs Jaguar vs Mercedes, the rankings are as given below: 1st BMW 330d nd 2 Audi A4-TDI-S Line rd 3 Mercedes C320 CDI Sport 4th Jaguar X-Type 2.2D Auto As per BBC Top Gear the price and feature comparison of similar models is given below: Jaguar Jaguar BMW 7- BMW 5- Jaguar BMW 3- Parameter XF XJ series series X-type series £32,925 £42,777 £52,165 £26,125 £20,362 £20,265 Tata – JLR: Future of the marriage | 9/21/2009 1 Price - - - - - - £58,925 £59,775 £95,450 £63,460 £29,097 £54,830 2 Overall 15 13 13 13 10 14 3 Comfort 14 14 12 12 12 9 4 Performance 18 15 17 17 13 16 5 Cool 12 13 12 8 7 12 6 Quality 13 11 13 13 11 13 7 Handling 15 15 15 15 12 14 8 Practicality 10 11 14 12 10 9 9 Running Cost 2 1 8 2 6 8 8
  10. 10. As per the above comparison, we can conclude that while Jaguar scores on comfort over BMW, BMW scores better on performance, quality, practicality and running cost over Jaguar. Top Gear describes each of the cars as given below: Jaguar XF: Replacing the talented but unloved S-Type, the XF pings Jaguar into the 21st century. Smoothness meets tech - rather like Jeremy Irons presenting Tomorrow's World. Jaguar XJ: The bridge between then and now, Jaguar's big saloon looks kind of dated, but is made of aluminium and packed with tech. Be warned: there's a new one coming. Jaguar X-type: A hopelessly misguided attempt to propel Jaguar into the mainstream, this Mondeo- clone saloon nearly bankrupted the whole company. Not long for this world. BMW 7-series: The all-new version of Bangle's beast isn't as ugly as the first, and it's an even better car. Loaded with technology, but lacking a little soul. BMW 5-series: You have to drive it to understand. It's all in the body control, the rear-drive chassis, the sweet steering. Challenging looks soften with familiarity. Find the money. BMW 3-series: A victim of its own success in that everyone on the planet owns one, so forget ideas of premium status. But for real drivers this is still Earth's best small saloon car. The above descriptions clearly describe Jaguar as an outdated design (except for the recent XF type) and BMW as technology loaded fun-to-drive car. Comparison of Land Rover vs BMW SUVs BMW Freelan BMW Range BMW Range Parameter X3 der 2 X5 Rover X6 Rover Sport £26,985 £21,060 £38,715 £37,098 £40,645 £56,851 1 Price - - - - - - £37,765 £34,940 £74,970 £61,900 £76,290 £79,535 2 Overall 7 14 14 12 9 17 3 Comfort 8 14 12 12 11 17 4 Performance 14 12 16 14 17 14 5 Cool 5 12 11 8 4 17 13 Tata – JLR: Future of the marriage | 9/21/2009 6 Quality 13 13 15 10 13 7 Handling 13 12 14 14 16 13 8 Practicality 10 10 13 11 11 12 9 Running Cost 2 6 1 1 1 1 As per the above comparison we can conclude that Land Rover scores on comfort and design over BMW‘s SUVs, BMW scores on performance, quality and handling over Land Rover. Top Gear describes each of the SUVs as given below: BMW X3: Savagely disappointing compact SUV that will leave hoardes of trusting buyers trying to figure out how BMW got it so wrong. Rides like a pogo stick on a cattle grid. 9
  11. 11. BMW X5: You won't be liked - nobody who can afford an imposing, seven-seat behemoth should expect popularity. But it's mainly jealousy. That and very grudging respect. BMW X6: Sorry, what was the question again? If you thought Mercedes was stretching the boundaries of possible niches, then check out this SUV/coupe. Freelander2: Compact SUV benchmark that's no longer styled like a bench. A real coming-of-age model, it sorts previous reliability issues and delivers the full urban cool experience. Range Rover: Part of the landscape of Britain, rather like Blenheim Palace or the Cotswolds – both of which, coincidentally, are places where Range Rovers gather like wilderbeast. Range Rover Sport: A slight commotion in the Range Rover world as the unruly cousin nobody mentions charges into the party with his loud friends. Wear your tweed cap back to front. The above descriptions clearly describe Land Rover models as more contemporary and improved, and BMW as an object of desire. c. Cu st om er An alysi s What customers want Jaguar is perceived as a retiring director's car, not one for the aspiring and successful executive in their forties. BMW appeals to the more thrusting buyer, Lexus and Audi appeal to those wanting something less brash and more understated. Jaguar is caught in the middle and although it has improved its quality greatly, it has failed to meet the value aspirations of the up-and-coming executive, who is now more likely to be embarrassed to be seen in a Jaguar at the golf club. Customers want a luxurious, high performance car with contemporary design and styling which jaguar fails to deliver as compared to its competitors. 2 . St r at egi c B rand Analy si s (T ata Nan o) a. S elf An aly sis Ability to deliver 1 lac cars Tata Motors has informed that Nano‘s production will be increased by 20% from Oct‘09 at its Tata – JLR: Future of the marriage | 9/21/2009 Pantnagar facility. The company is expecting to produce around 40,000 units of Nano this fiscal and it will aim to manufacture 1.7 lakh units during 2010-11. ―In the past three months, we have been producing about 2,500 Nano‘s per month. We are gearing up for a higher number. We are ramping up our production capacity by 20% from this month. After the increase, sales will be more than 3,000 vehicles per month,‖ Rajiv Dube, president (passenger cars) of Tata Motors, said. He also added that the company averaged around 2,500 Nano‘s during the last three months. Tata Motors had sold 2,524 Nano‘s in Sep‘09. Tata Motors will roll out the Nano from its main plant at Sanand in Gujarat that would start its production in the Q1 of 2010-11. The plant will roll out Nano in February 2010, which will increase it up to 1200 units March. 10
  12. 12. Hence, from Mar‘10 onwards, the total Nano production capacity will be around 4,200 cars per month. So, Tata will be able to deliver 1 lac cars by May 2011 only. But, Tata is aiming to complete 1 lac cars by July 2010 by quickly ramping up production to 1.7 lac cars per annum. Break even analysis for Nano The chairman of the Tata Group Ratan Tata had announced the relocation of the Rs 2,000-crore Tata Nano project to Gujarat from Singur in West Bengal. Due to abandoning of the Singur project, Tata had to write off Rs.1,500 crores. The cost breakup for manufacturing a car as given by 2 different scholars is: Tata – JLR: Future of the marriage | 9/21/2009 In India, the average labour and health care costs will be lower which will give a cost advantage of another 7-8% as compared the manufacturing costs given above. Hence, assuming the average MSRP (Manufacturer Suggested Retail Price) of Tata Nano as Rs.1.5 lacs, the remaining cost calculation for Tata Nano will be as given below: 11
  13. 13. % of S.No. Component MSRP Vehicle Manufacturing Cost (Direct 1 45% Material & Labour) 2 Production overhead 10% 3 Corporate overhead 5% 4 Selling expenses 20% Total Cost (other than depreciation 5 80% & amortisation) Rs.(lacs) 6 Average price of Tata Nano 1.5 7 Cost of production 1.2 8 Margin recovered per car 0.3 Projected annual production 9 1,75,000 vehicles capacity by Mar'11 10 Total margin recovered per year 52,500 11 Total investment in new plant 2,00,000 12 Total investment sunk in Singur 1,50,000 13 Total investment in the project 3,50,000 No. of years to recover the 14 investment 6.7 As per the above calculations it will take almost 6 years and 9 months for Tata to break even on the Nano project. Hence, the Tata Nano project will break even by the end of 2018.This is the earliest possible scenario. However, new environmental regulations are expected in 2015 which may require some more investment in the project thus delaying the break even further. b. C omp etit o r An aly si s Existing competition for Nano Comparison of Tata Nano with Maruti 800: The Nano has 21% more interior space (albeit mostly as headroom, due to its tall stance) and an 8% smaller exterior compared to its closest rival, the Maruti 800 while being around 33% cheaper than the Maruti 800. Hence, while reliability due to being proven technology favours Maruti 800, Tata Nano has a significant advantage in terms of price, interior space and fuel efficiency which gives it an edge. Criterion Vehicle 1 Vehicle 2 Tata – JLR: Future of the marriage | 9/21/2009 1 Vehicle Names Tata Nano Maruti 800 2 Size (length x width x 310 x 150 x 160 333.5 x 144 x 140.5 height - all in cm) 3 Transmission 4 speed 4 speed 4 Fuel Tank (liter) 30 28 5 Wheelbase (cm) 223 217.5 6 Seating Capacity 4 4 7 Estimated Mileage (km / 20 16 ltr) 8 Engine (Gasoline / Petrol) 2 cylinder 3 cylinder 9 Cylinder Size (cc) 623 796 10 Maximum Power (hp) 34 @ 5500 rpm 37 @ 5000 rpm 11 Price (ex-showroom Blr) Rs.1.31 - 1.79 lacs Rs.2.02 - 2.14 lacs The customer‘s reviews from the popular website are given below for both the products. 12
  14. 14. As we can see that even though Maruti 800 outscores Nano on 3 out of the 6 points, more consumers recommend Tata Nano due to its novelty factor and pride in ownership (due to the hype created before launching the product). Future competition for Nano 1. Bajaj-Renault ULC Car: In May 2008, Bajaj and French car maker, Renault, had announced joint project on launching a car for Rs.1 lac by 2011 to compete with the Tata Nano. Even though lot of progress has been made since then on this front, recently the project has entered a deadlock phase due to disputes between the 2 parties on various issues. The details of the joint announcement and the recent news on deadlock are appended below. Hence, the actual launch of the car may get delayed till 2013 till the critical issues mentioned below are sorted out. Bajaj, Renault, Nissan sign JV for small car codenamed ULC, $2,500 car scheduled for 2011. BS Reporter - May 13, 2008, 0:07 IST Bajaj Auto announced its joint venture with European car maker Renault and Japanese giant Nissan to manufacture a small car in India with a wholesale price tag of $2,500 (Rs 1.03 lakh). Tata – JLR: Future of the marriage | 9/21/2009 The car, code named ULC, will hit the roads in 2011. A tripartite joint venture will be formed in due course, in which Bajaj will hold 50 per cent and Renault and Nissan 25 per cent each. The 3 companies planned to sign a memorandum of understanding (MoU) with the Maharashtra government for the plant, which will come up in Chakan, near Pune. Bajaj-Renault small car plan hits a roadblock 22nd May 2009, 0047 hrs IST, ET Bureau Bajaj Auto and Renault's plans of launching an ultra small car to take on Tata Motors' Nano may get delayed once again as a new set of differences over branding crops up between the two partners. Rajiv Bajaj, managing director of Bajaj Auto, told a press conference in Mumbai on Thursday that there are issues over branding and a final joint venture agreement has still not been signed. 13
  15. 15. This development is likely to make the combine miss 2011 deadline for launching the car, ET had said. Tata Motors' Nano, launched in April this year, has already received bookings for over two lakh vehicles and the car is likely to hit the road some time later this year. While Renault-Nissan has been in favour of a cost competitive car to take on the Tata Nano in the highly price conscious Indian market, Bajaj Auto has always stressed on fuel efficiency over price. The design of the ultra low cost car was frozen in late September 2008, and work on the power train - the engine and transmission combine also called the heart of the car - was continuing. Sometime early this year, it was abruptly called off by Mr Bajaj who wanted to redo the whole thing. Renault COO Patrick Pelata admitted at the recent Geneva Motor Show in March that the Bajaj Auto MD was unhappy with the design and positioning of the proposed ultra-low-cost car. A Renault India official had said at that time that the project would be delayed by at least five to six months. The second major difference has occurred over the branding. Sources say that Bajaj is not keen on the Renault-Nissan name playing a dominant role and is keen on the Bajaj name retaining the upper hand. 2. Tara Tiny Electric Tara Tiny Steals Tata Nano’s Position as World’s Cheapest Car Published on March 19th, 2008 Tata – JLR: Future of the marriage | 9/21/2009 Tara International announced that it will be selling two electric vehicles for even cheaper than the Tata Nano. These two cars will be priced at approximately 99K Rupees (2,475 USD), and are built in partnership with a Chinese company named Aucma. Not much of a difference on the face of it, but the Tara vehicles being electric compared to the Tata‘s gasoline powertrain would make you think the Tara would be much more expensive. The Tara Tiny can only reach speeds up to 50 kmph. About competition with the Tata Nano and the Tara‘s image as a green car, Tara Ganguly (company head) had this to say on the website Reddiff: ―But the cars that I have conceptualised are ‗green‘ cars. Therefore, the question of comparing these (environment-friendly cars) with the Nano doesn‘t arise at all‖. The Tiny is projected to be battery operated, providing 1 km at 50-70 paise. At the moment, four variants of electric cars are ready at the Tara International factory at Palta, a 14
  16. 16. few kilometers from Kolkata. These are Tara Tiny, Tara Titu (two-seater and four-seater, respectively), Tara Shuttle, and Tara Carrier. While Tara Tiny and Tara Titu are priced at Rs 99,000 (approximately), Tara Shuttle and Tara Carrier are priced at Rs 500,000 (approximately). Reasons for lower bookings (1.7 lacs) than expected (4-5 lacs) I. The car was expected by the public to be launched at a price of Rs.1 lac. This would have clearly brought it close to its competitor i.e. the 2-wheeler to which it was targeted. By pricing it at 1.3 to 1.7 lacs, the car‘s positioning has been distanced from the 2-wheelers and brought it in competition with the new and 2nd hand Maruti 800 cars. II. The loans being disbursed by the banks are on an average at a higher interest rate as compared with the other cars considering the risk profile of the target customers. This also the raises the cost of ownership of the vehicle for a customer and further reduces the actual gap between the Nano and Maruti 800. III. The deliveries were delayed by almost 7-8 months due to the Singur plant dispute. Moreover, the almost the entire amount (~ Rs.1 lac) was collected while booking the vehicles while customers have to wait for 6 months to 1 year to get the delivery of their car. Depositing such an amount (higher share of price of car) upfront is difficult for most of the customers in that category. IV. The company also has focused on selling higher numbers of the deluxe variant (65%) and not the standard variant which further erodes the cost advantage of Nano over Maruti 800. c. Cu st om er An alysi s Tata – JLR: Future of the marriage | 9/21/2009 The initial target customers of Tata Nano were those people who could afford a 2-wheeler (~ Rs.40,000) but could not afford even a second hand car (~ Rs.1.2 lacs). Hence, initially the car was targeted to be priced at Rs. 1 lac which would have been the right price to target the typical 2-wheelr lower middle class Indian family. But, finally the product is launched at a starting price of Rs.1.3 lacs i.e. at a price at which the customer can even buy a proven reliable 2 nd hand car like Maruti 800. Morover, as the company will be producing higher numbers (~65%) of deluxe models, the average buying price would be around Rs.1.6 lacs. Hence, by investing another Rs.30-40,000, the customer can buy a Maruti 800 which is not only a proven technology but is also readily available off the shelf. So, now the target customers for Tata Nano are: I. The 2nd hand small car buyers who are comprised of the middle class of our society who either cannot or do not want to purchase a brand new Maruti 800. II. Customers who may already be owning a car but may be planning to buy a 2 nd hand car for their wife. 15
  17. 17. From the above analysis, we can conclude that from the booking data it would seem that the males prefer the car more than women as males are more dominant in the strata of the society towards which Nano is targeted. Moreover, if the customers are made to wait further then the potential customers will start defecting and eventually when the production will be spruced up there will not be many takers for the vehicle. Then, the takers for the vehicle may be commercial vehicle and auto rickshaw owners who will find the product attractive once it is available readily off the shelf. This will lead to proliferation of the vehicle in the taxi and auto segment which will affect the self-image of the private car buyer who may not like to associate himself with the product. 3 . B r and Identi ty Syste m (We have only mentioned the differences between the brands and excluded the commonalities. As the differences are on different dimensions hence we have not rated but found out the distinct aspects) J LR vs BMW JLR BMW A Brand as Product 1 Product Scope Luxurious car High performance car with gizmos 2 Product Attribute Elegance, Regal Technological marvel 3 Quality/ Value Comfortable Reliable 4 Uses Couture culture Fun, frolic & business 5 Users Car for directors/ CEOs Car for young recently successful executive 6 Country of origin British heritage German craftsmanship 7 Conclusion A luxurious car which A high performance car represents the British royal which represents the heritage but perceived a bit German technology and is outdated and considered as meant for the successful an antique young Tata – JLR: Future of the marriage | 9/21/2009 B Brand as Organization 1 Organization Static & glued to heritage Dynamic & innovative attributes 2 Local vs Global More Local More Global 3 Conclusion A prestigious brand which A brand which has steadily did not adapt to the adapted to the demands of changing environment the consumers C Brand as Person 1 Personality Mature, Traditional Young, Energetic 2 Customer Aristocratic Grandfather Adventurous Friend relationship 3 Conclusion A mature old person who A young adventurous has a rigid set of values & person who moves with the 16
  18. 18. principles contemporary times D Brand as Symbol 1 Symbol 2 Visual Imagery& The Dark Knight, Stealth, Sunshine, Propeller Metaphor Sleek 3 Brand Heritage British royalty German technology 4 Conclusion A royal elegant brand A modern brand known for sheer performance T at a N an o vs M aru ti 800 Tata Nano Maruti 800 A Brand as Product 1 Product Attribute Latest cheapest car offering Cheapest car in the market more space for more than 20 yrs 2 Quality/ Value Get more at lowest price Value for Money; Reliable workhorse 4 Users First time car buyers who First time car buyer who is want to flaunt the novelty concerned more about factor at lower price reliability 5 Country of origin Indian car from an Indian Indian car from a Japanese maker maker 6 Conclusion Cheapest Indian car for a Cheapest Japanese car buyer who has a dream of which was the foundation of owning a car and travelling automobile revolution in with family India B Brand as Organization Tata – JLR: Future of the marriage | 9/21/2009 1 Organization Trustworthy, thinking Dependable, reliable & attributes about the common man efficient 2 Local vs Global More Local More Global 3 Conclusion An Indian brand known A Japanese brand which has trusted by the common found a place in every other man Indian’s heart C Brand as Person 1 Personality Infant but from a trusted Old but reliable family 2 Customer New born baby with Concerned, caring aged relationship trusted origins uncle who never gets tired 3 Conclusion A brand which is quite A proven brand which is 17
  19. 19. premature but has a strong outdated but extremely family legacy reliable D Brand as Symbol 1 Visual Imagery& Car for the common man Car which put India on Metaphor wheels 2 Brand Heritage Truly Indian Japanese turned Indian 3 Conclusion A brand which is close to A brand which is close to the common man’s heart every Indian who has been who dreams to own a car able to fulfill his dream of one day in his life owning a car 4 . V alu e P r opo siti on ( JLR & T at a N ano v s C omp etit o rs) a. Fun cti on al B enefi ts Tata Nano: All the advertisements and promotions of the Tata Nano communicate the functional benefits of the car. 2 samples of the ads are given below. One of them speaks about the space inside the car while the other speaks about the price. The car is positioned as – ―A comfortable, safe, all-weather people's car, high on fuel efficiency and low on emissions‖. Tata – JLR: Future of the marriage | 9/21/2009 Hence, the functional benefits of Tata Nano over its competitor are: I. Less price II. More space III. More comfort IV. More mileage 18
  20. 20. b. Em oti on al B enefi ts Maruti800: The ads of Maruti 800 convey the aspect of bringing a change in one‘s life on purchasing the car. It correlates the sales of the car with changing the lifestyle of millions of middle class Indian families. Hence, the ads convey the emotional benefit of bringing a change in one‘s lifestyle on purchasing the car. BMW: All BMW ads focus on conveying the sheer high performance of the vehicle. Both the ads given below convey the amazing acceleration of the car. Hence, the focus of the BMW ads is to communicate the emotional benefit of feeling excited and exhilarated when driving a BMW. Tata – JLR: Future of the marriage | 9/21/2009 19
  21. 21. c. S elf Exp r essi ve Ben efit s Jaguar: The latest ad campaigns of jaguar are another candidate for the ―Just Plain Wrong‘ category. The Jaguar ―Gorgeous‖ campaign suggests that beauty represents the single most important characteristic not only in a car but in a person. The TV commercial compares the Jag to a bevy of beautiful people (mostly young women wearing very little clothing) as they attend extravagant parties, play around poolside, and generally lounge about. The voice over announces that ―gorgeous gets in everywhere‖ and that ―gorgeous trumps everything.‖ Thus, this campaign suggests to the viewer that by owning a Jaguar one becomes beautiful and that being beautiful automatically makes ones superior. Although a consumer must shell out a lot of money to attain this beauty, the social reward will be well worth it, because ―gorgeous pays for itself in the first five minutes.‖ Land Rover: This campaign demonstrates Land Rovers ruggedness and tough outward appearance. It appeals to men who seek adventure in their lives. From left to right the ads target the hunter, the winter sportsman, and the camping enthusiast. Thus Land Rover creates a consumer imagery of a person who wishes to be seen as rugged and adventure enthusiast. These ads also demonstrate the exclusivity of the premium product by saying that those who don‘t fit the above criteria, this SUV isn‘t for them. Tata – JLR: Future of the marriage | 9/21/2009 20
  22. 22. Hence, the self expressive benefits of Jaguar over its competitors are: I. High class brand clubbed with British royalty II. Belong to the circle of the gorgeous and the affluent The self-expressive benefits of Land Rover over its competitors are: I. Adventure seeking and daring II. Connoisseur of exclusives APPENDIX An swe r s t o sp eci fic que sti on s Q1. Despite being a prestigious brand why did J. bleed for so long? Why doesn’t it make money for Ford? What makes you think it will make money for Tatas? Why is it that despite exporting to several countries the cars J and Land Rover don’t make money? Ford acquired the British nameplate in 1989 and has now sold it, along with the Land Rover brand, to India‘s Tata Motors in a deal that will make the struggling U.S. automaker about $1.7 billion — roughly a third of the price it paid for the two luxury brands. Jaguar‘s image has seriously eroded in recent years under the ownership of Ford, despite a revival in its flagging quality. Jaguar hasn‘t kept up with the times, particularly when it comes to style. Research shows Jaguar buyers are older than the average luxury car shopper. Jaguar is suffering from an aging audience, according to George Magliano, director of automotive industry research at Global Insight. ―I don‘t think people under 60 are aware of the luster of the Jaguar brand name,‖ said Magliano. ―This is a difficult market, and people don‘t necessarily see the Jaguar brand as a luxury sports car any more. And over the last decade the product just hasn‘t been there to grab the American consumer.‖ Jaguar, which traces its history to 1922, once stood for everything that‘s best about automobile manufacturing — outstanding design, engineering and performance. Now the posh British carmaker stands for everything that‘s wrong at Ford. One of the reasons for the demise of Jaguar may have been a decision to reduce costs by sharing parts Tata – JLR: Future of the marriage | 9/21/2009 across brands, so that Jaguars are built using platforms on which other Ford vehicles are built, said Jonathan Linkov, Consumer Reports‘ managing editor for autos. The practice is common in the auto industry, but in this case may have hurt Jaguar‘s image or quality. Another reason for Jaguar‘s fall from grace is styling. Ford has been criticized for letting the look of Jaguars age said Linkov. Jaguar‘s flagship model, the XJ, which starts at just north of $64,000, has kept the classic Jag look from the 1950s and ‘60s until very recently, he said. That look might appeal to Jag aficionados, but not necessarily to a broader group of consumers. Ford board never understood the heritage it had bought into. Instead it saw the potential for higher margin volume business that Aston Martin with around 2000 cars per year, could never fill. It was the bean–counter‘s approach which sought to improve quality as cheaply as possible, by raiding the Ford parts bin, at the expense of good design. X-type Jaguar had diluted the brand through its association with the economy family saloon, the Mondeo. 21
  23. 23. Ford Motor Company made the classic volume car manufacturer mistake of seeking to build profits through a volume model Jaguar. Quite simply Jaguar is an aspirational brand. For many an industry leader in the past, to be able to aspire and achieve a Jaguar was akin to appearing in the New Years Honours List. Both aspirations have suffered - who wants a posh car built on a Ford Mondeo platform? Equally, honours now allegedly have their price. When you bought a Jaguar you got mostly a standardized package with the features you would expect to find in a high end car, but the customization offers were extremely limited. Jaguar also heavily relied on people knowing what their cars represented and delivered, such as Ferrari and Lamborghini have been, and they therefore had close to no major advertising except for word of mouth marketing, ads in magazines decided through demographics and an occasional image advertisement. This actually made them lose a lot of ground to their competitors when the competition got ahead in the 90s and people could no longer identify with the Jaguar brand. Unlike the three German manufacturers (BMW, Mercedes & Audi), Jaguar tried a completely different approach to renewing their model line. They did something that has only been tried by Porsche with their Boxster, although with not as devastating results for their company. What Jaguar decided to do has not been redone by any automotive manufacturer in the class Jaguar was previously in, precisely because of the results. Because of declining sales of their high end expensive cars they wanted to try a new approach with concentric diversification, and release a car more affordable, than the XK and XJ ranging around $80,000, in a new class. When Jaguar redesigned its line in the late 90s, they made two sedan class concepts codenamed X200 and X400, commonly known as the X-type and the S-type. The X-type was a compact car retailing around $35,000 and the S-type was a mid-size car ranging from $45,000 and up. The three German car manufacturers also had cars in this range, but their cars in this class were the foundation of their brand image in the first market they entered, and later penetrated the higher-end markets of car because of product positioning and customer satisfaction with their products. What Jaguar did was just the opposite, they had their top models in almost a niche market where they were already struggling, and should have enforced their position, instead of starting to building less expensive cars in a broader new market. Because of this they created a chaos for customers trying to identify with the Jaguar image and the lifestyle it had offered. It was no longer exclusively a superiority image brand such as Bentley who still doesn't offer anything below $150,000, or affordable such as Toyota which is more affordable. They had entered a new market segment where they had no experience, no customer recognition at all and were lead by competition oriented pricing against a massive amount of parity products by other manufacturers whom all had a competitive advantage because of their time spent in this market combined with customer satisfaction. Tata – JLR: Future of the marriage | 9/21/2009 On top of all this, Jaguar did not put on a massive advertising campaign which the potential buyers could identify themselves with in the public market they were now trying to penetrate with their new products. This must have been one of the best examples of competitive myopia in the automotive industry of all times. The Ford idea that Jaguar could make 200,000-300,000 cars a year was crazy. It should be making 100,000 at the most. It is a niche product and the company must choose its battlegrounds carefully. If a luxury car company cannot improve the profit per car sold, it is finished. The X-Type epitomizes Jaguar‘s stubborn persistence with traditional design that even cloaks its most technologically advanced flagship, the XJ. Ian Callum, the designer hired to inject contemporary styling into Jaguar, says the X-Type was the wrong car for its target audience. ―It‘s a difficult one the X-Type. It‘s certainly not a car I would have designed [for the mid-size luxury market],‖ says Callum. ―The X- Type was a traditional-looking car for a young market. And let‘s say that that balance wasn‘t quite correct. Younger-minded people and even older people in their 50s don‘t want to drive a car that their dad would have driven.‖ 22
  24. 24. During one of the interviews, Ian Callum even said that under Ford‘s ownership it used to take weeks for approval of a design and now under Tatas it gets done in a couple of days. This is critical as luxury brands thrive on continuous innovation and design upgradations. Hence, to summarize, the reasons why JLR bled under ford‘s ownership were: o Positioning as volume model instead of premium pricing and delivering exclusivity o Cost cutting measures (like platform sharing with Ford for new models) led to loss of identity o Retro-styling and not updating styling with times hence no brand associations with youth o Lack of focus as Ford itself was struggling with its own brands. This was before the formation of Premier Automotive Group. o Delay in design updations o Insufficient brand building efforts for new products Q2. Your conclusion is that J and Land rover purchase “is a vanity purchase the shareholders of the Tata group can live without” – fair enough. This is an impression. I want u to prove this assertion with facts and figures. What happened to the balance sheet, why this doesn’t/does make financial sense, why it doesn’t make marketing sense, how the Tatas failed in the past in such endeavors (if they did)….etc…. Only then can you claim this. Tata Motors had done the following acquisitions in the recent years: Tata Stake Acquired company Country Value Year company acquired Tata Jaguar and Land Rover brands UK $2.3 billion (approximately) March 2008 Motors Tata Finance India Merger April 2005 Hispano Carrocera Spain 21 per cent Euro12 million February (Rs70 crore) 2005 Daewoo Commercial Korea 100 per cent KRW120 billion ($102 million, March 2004 Vehicle Company (wholly- Rs465 crore) owned) The new money-losing brands from Ford will test management at Tata Motors as never before. And the challenge comes at a time when the Indian company is already stretched. In addition to the Nano, Tata recently launched a new multi-utility vehicle, the Sumo Grande, and will introduce new versions of its Indica hatchback and Indigo subcompact. Jaguar and Land Rover will also have to compete with Tata's other auto businesses for funds and Tata – JLR: Future of the marriage | 9/21/2009 management time, including its commercial vehicle business and a joint venture with Fiat (FIA) inked last year that will produce vehicles in India and Thailand. With the new luxury marques Tata's management will not find time to dedicate it to reviving the brands. Then there's the challenge of selling Jaguars in India and a line of Indian-owned luxury brands around the world. In India, demand for the luxury marques in the short term is likely to be limited. While growing quickly, India's luxury car segment accounts for only 1% of the total car market. BMW and Mercedes - Benz, for example, sell just 3,500 cars a year in India between them. "The Jaguar could surely sell a couple of hundred cars in India," says Paul Blokland, chief executive of Segment Y, an auto consultancy based in the southern Indian state of Goa. Whether Indian ownership will affect Jaguar sales is harder to determine. To date, an Indian passenger car has never been an international success. Tata, for example, failed to sell its Indica car, rebranded as the City Rover, in Europe in large numbers after its launch in 2003. And while most analysts and auto industry observers view the Jaguar and Land Rover purchase as good for the brands, some wonder 23
  25. 25. whether Tata, despite running high-end hotels in India, has the marketing experience to handle the challenges of the high-end car business. The balance-sheet of Ford before sale of JLR is as given below: As we can see from the balance-sheet that the liabilities are quite higher than the assets if the goodwill amount towards the brand value is removed. The brand value of JLR has also got tarnished and hence it would require huge amount of funds to revive the brand. Hence, Tata has not acquired any positive assets but has acquired an ailing brand at a time when Tata itself is facing a severe cash crunch. Tata currently spends merely 0.2% of its revenue towards Product Development (R&D) while luxury brand manufacturers like BMW and Mercedes spend nearly 6% of the revenue towards the development of new products. The excerpt from the financial statement of Mercedes Benz is given below. Mercedes Benz spend on R&D ~ 6% of revenue. Tata – JLR: Future of the marriage | 9/21/2009 24
  26. 26. Similarly, the excerpt from the BMW‘s financial statement is given below. BMW spend on R&D ~ 6% of revenue. While Tata Motors spend on R&D is merely 0.2% which can be calculated from their financial statement given below: Tata – JLR: Future of the marriage | 9/21/2009 25
  27. 27. As per the financial statement of Ford showing JLR business (PAG) below, Tata – JLR: Future of the marriage | 9/21/2009 Tata will have to spend atleast 6% of $33,000 mn i.e. ~ $2 bn or ~ Rs.8,000 crores annually on R&D while the profit of Tata Motors is around the range of Rs.2,000 crores. For this Tata will have to take significant amount of additional loan (as the total reserves of Tata motors is Rs.7,500 crores only) which will not be sustainable and even Tata Motors will then continue to bleed. 26
  28. 28. The fact is that Tata has been making mediocre trucks for more than five decades in India and never managed sell them outside India in substantial volume. Tata Group has never achieved global quality excellence in any business that they have been operating in the last one century, except in hotel services and perhaps in software manpower management. Jaguar and Land Rover will not generate return in the next 10 years and will have to fight with labor when the going gets inevitably rough; Ford knew this only too well when it sold both brands. In conclusion, it seems that Tata‘s purchase of Jaguar and Land Rover is a vanity purchase shareholders of Tata Group can live without. However, following will be the benefits to both parties from the takeover will be: o access to the European market for Tata, o access to the Indian market for Jaguar and Land Rover, o opportunities for Tata in the growing Indian luxury and defense segments, o Tata gets access to Ford's hybrid and low-emission powertrain technology. The current debt situation of Tata with regard to the JLR deal is described below: Tata Motors has raised $750 million (about Rs 3,600 crore) through global depository receipts (GDRs) and convertible bonds to pay off rest of the debt it incurred for acquiring UK‘s iconic brands Jaguar and Land Rover. Tata Motors‘ consolidated debt is around Rs 34,900 crore, largely the result of JLR acquisition. The auto major, which has already repaid a chunk of the $3-b bridge loan it took to fund the JLR buy, needs to repay the final $700 million Q3. What is the right way of naming N and J. Should the latter have any Tata association? What is the situation today? If we look at Tetley [tea], we don‘t see the Tata brand on it at all. Tata puts the interests of the brand and the community it serves at the forefront. The process we‘ve seen appears to be a typical Tata deal. The U.S. launch of the Acura marque by Honda influenced Toyota to launch its premium brand under the name of Lexus. Nissan created its own luxury division, Infiniti, while Mazda also considered developing a luxury division, to be called Amati. Hence, all auto-makers named their super premium cars separately without Tata – JLR: Future of the marriage | 9/21/2009 having any association (atleast in name) with the parent brand. Young-Key Koo, a Hyundai executive has confirmed that Hyundai are intending to establish a stand- alone luxury brand that will feature its own unique branding and logo, much like Toyota‘s Lexus luxury division. Hence, Jaguar-Land rover should not have any association with Tata and ―Tata‖ should not figure on any of its products. All car makers in the world who make premium and economy brands name the products and manage the organizations separately to serve the demands of each type of product. Q4. Will the demand for J and Land Rover (L) in Asia substitute the loss in European market? What is ur guess and why? There are growing opportunities in China and Russia with the sudden rise in wealth. Moscow and Beijing already have two of the largest Bentley showrooms in the world. 27
  29. 29. The fastest growing markets for these high price products include China, the former Soviet Union, certain Eastern European states and India. Both BMW and Mercedes individually sell 13-14 lac cars every year of which they sell around 2,700 and 3,100 cars each in India, around 60,000 and 40,000 cars in China and around 20,000 and 17,000 cars each in Russia. Hence, the total sales in emerging markets is around 80,000 and 60,000 cars for BMW and Mercedes respectively i.e. ~ 4-6% of the total sales in developed economies. Considering the miniscule sales of premium successful cars in the emerging markets, it is almost impossible for JLR to substitute their loss in Europe and US by selling cars in Asia. Q5. Will J and L improve Tatas’ product development capability if nothing else? Tata will run JLR on a standalone basis. Synergies between JLR and Tata Motors are minimal at present. But, through the takeover, Tata will gain access to hybrid and power-train technology of Ford, off-road vehicle development capabilities from Land Rover and luxury car design capability from Jaguar. In 1999, Ian Callum was appointed to succeed the late Geoff Lawson as Design Director at Jaguar, which had become a Ford Motor Company subsidiary in 1990. At Jaguar, since the Lawson designed 2001 X-Type and 2002 XJ were well advanced his influence was initially felt through a series of concepts, the 2001 R-Coupe and 2003 R-D6. The first production Jaguar to bear his influence was the 2004 facelift of the S-Type followed by the 2004 X-Type Estate, of which he was responsible for the tailgate design. With the next generation of Jaguar models Callum hopes to take Jaguar away from the Lawson -era retroism, which produced the slow-selling X-Type, S-Type, and XJ towards a language that is more dynamic and modern. This coincides with a change of strategy for Jaguar, which will see them becoming a more exclusive and low-volume manufacturer. Tata – JLR: Future of the marriage | 9/21/2009 The experience of the design director, Ian Callum, will not only help in propelling Jaguar on a better path as he has proved with the Jaguar XF, but will also transfer the same worthy capabilities to the design department of Tata in India. Q6: Will the brand Tata become global due to J and L? In the west how are they branding J and L? Is it Tata J and Tata L or is it simply those brand names? We define a 'global product' as one where the source has been decoupled from the brand. In order to be able to properly position Tata is continuing to play the country-of-origin card. The cars are presently being sold as Made In England. Hence, the cars are presently being sold in west just as before and not with Tata name. But, Tata is so strongly associated with Indian history that atleast in the short run it is impossible for it to become a global brand. 28