Jaguar turns the corner with Tata

September 02, 2012 09:22 pm | Updated July 01, 2016 07:48 pm IST

Four years after being bought by Tata Motors, well-known but somewhat faded British brands — Range Rover and Jaguar — are regaining some of their lost lustre. File photo

Four years after being bought by Tata Motors, well-known but somewhat faded British brands — Range Rover and Jaguar — are regaining some of their lost lustre. File photo

This summer, Jaguar Land Rover cranked up production to 24 hours at its plant near Liverpool, England, adding 1,000 jobs to help meet demand for its hot-selling and acclaimed Range Rover Evoque. Now, the company is readying the release of its much-anticipated Jaguar F-Type roadster.

Lost lustre

Four years after being bought by Tata Motors , the well-known but somewhat faded British brands are regaining some of their lost lustre, racking up big sales from Shanghai to London.

The success has stunned analysts and investors, many of whom had said that Tata Motors was making an expensive mistake when it acquired Jaguar Land Rover from Ford Motor for $2.3 billion in June 2008.

At the time, Ford was raising money to ensure its own survival, and it sold the brands for several billion dollars less than it had paid to acquire it years earlier.

Analysts say Tata has done what few companies from emerging markets have been able to do turn around and successfully run a troubled Western company. Many others, including Tata Motor's sister company Tata Steel, which paid $11.3 billion for Corus Steel in 2007, have struggled with acquisitions made in Europe and the United States in the era of cheap money before the financial crisis.

Tata Motors appears to have succeeded in large part because it did not seek to run Jaguar Land Rover from their headquarters in Mumbai. Instead, it has left day-to-day management in the hands of executives in England. It also benefited from projects started under Ford ownership, including the Evoque, which has won fans.

Retail sales jump

In its last fiscal year, which ended in March, Jaguar Land Rover posted a 27 per cent jump in retail sales, to 3,06,000 vehicles, and became the primary driver of growth and profit for Tata Motors. Tata’s car and truck business has stagnated in the same time because of a slowing domestic economy and a weak product line up that includes about a dozen passenger cars. Sales of Tata cars were up an anaemic four per cent in the previous fiscal year. Analysts said that barring a global economic recession, they expected Jaguar Land Rover to continue to do well because it was about to release several new models, including a redesigned version of its flagship Range Rover and the F-Type.

Tata's takeover of Jaguar Land Rover did not always look promising. The financial crisis hit soon after the deal closed, and demand for luxury cars tumbled in Europe and North America its two biggest markets. Struggling with a $3 billion debt it took on to pay for the deal, Tata Motors was forced to put more money into the company after it failed to secure financial aid from the British government. “The acquisition has worked because the investment has been carefully targeted and effective,” Phil Popham, global operations director for Jaguar Land Rover, said in a written response to questions. Analysts and competitors credit the turnaround to Tata's financial reserves, which helped it weather tough times, and its wisdom in granting autonomy to managers in England.

“What has helped is that Tata had staying power,” said an executive at another auto company who asked not to be named because he did not want to speak publicly about a rival. “And Tata adopted a hands-off policy.”

Led by a former BMW executive, Ralf Speth, who took over as chief executive in early 2010, Jaguar Land Rover makes all of its cars, which range from $36,000 for an entry-level SUV to $140,000 for a convertible, in factories in England, though it is now starting assembly operations in other countries. Earlier this month, the company reported that its latest quarterly profit was up 7.5 percent from a year ago to $372 million.

Much of the success has come in China, a country that provided just 5 percent of Jaguar Land Rover's sales as recently as 2005 and is projected to generate sales in the double digits this year.

Analysts say that for Tata Motors, which recently hired a senior executive from General Motors to help revive its flagging Indian auto business, Jaguar Land Rover is likely to remain a driving force for the near future. — New York Times News Service

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