Tata Wants Jaguar To Roar In India – US-FOREX.US
Tata Motors may have launched Jaguar and Land Rover to much fanfare in Mumbai on Sunday, but the Indian carmaker is also taking a gamble in its goal to revamp the struggling British brands it bought in June last year.
Tata has said that it wants to target India’s wealthy, but growth in the country’s luxury car market may be more limited than hoped, not least because of the global economic slowdown. “Tata’s challenge will be to carve out a niche in a market that overall is very tough and very competitive,” said David Leggett, managing editor at industry website Just-Auto.com. “Both brands have a historical brand appeal but it is never easy to establish a brand in new markets.”The Chinese market appears to have more potential for luxury car manufacturers, said Daniel Schwarz, an auto analyst with Commerzbank. “India offers better options for the mass segment this is why Tata has launched the Nano there.”The brands were officially launched at a ceremony in Mumbai on Sunday by Ratan Tata, the chairman of the Tata Group. “Jaguar Land Rover has been well received and well established in India, but over the years this brand has been disconnected from India,” he said.Jaguar Land Rover’s chief executive, David Smith, also said Sunday that the company might cut more jobs if its slump in sales continued, in addition to the 2,000 job cuts announced last January. The two luxury brands do seem to have potential in emerging markets: While Jaguar and Land Rover sales fell by 35% in the U.S., U.K. and Europe between June 2008 and March 2009, sales increased by 8% in Russia and China over the same period, according the companies’ figures.Jaguar Land Rover has not performed well over the last 20 to 25 years in the U.K. due to “many failures of investment”, according to Howard Wheeldon of BCG Partners in London. The company has been in the hands of many owners, from the U.K. government to Ford Motor, and has struggled with overcapacity.
Since it produces cars that are less eco-friendly than other models, Jaguar Land Rover is also more exposed to higher fuel prices, as well as E.U. targets on carbon dioxide emissions that have put pressure on the research and development side of its business.
“This time Tata will give Jaguar Land Rover the support it needs, but for the moment it still needs the U.K. government assistance,” Wheeldon said. Last December, the company asked the British government for state aid to help it ride out the recession.
Tata is also said to have injected capital to help the struggling company. Tata Motors
was down 0.4% in pre-market trading in New York on Monday.