There are two ways to acquire a valuable brand; the long road, which is to build it from the ground up, which can take years locally and decades globally…or the short route, which is to buy an existing one. If you’ve got a couple of billion dollars lying around, you’re impatient, and you’ve got 83,000 millionaires in your backyard, you might be thinking what Ratan Tata, the 71-year-old chairman of Tata Sons Ltd in India is thinking: the Land Rover-Jaguar portfolio looks pretty solid.
Tata Motors is basically a manufacturer of commercial vehicles that has been building passenger cars for only a decade. Mahindra & Mahindra, another Indian firm with the same longing look at Ford’s “For Sale” sign, specializes in agricultural and utility vehicles, and is just starting to build passenger cars. Never mind that neither company has any experience or expertise in marketing luxury vehicles, there’s a market here, dammit!
So let the bidding begin. That, at least, both companies have some experience in. The Tata Group has spent the better part of last year throwing around over $15 billion in buying overseas assets. Steel, tea, luxury hotels, jewelry…so what’s so hard about marketing luxury automobiles? Or building them, for that matter?
The question that is floating around, then, boils down to this: Parent company Ford ran Jaguar for some 18 years and lost in excess of $10 billion in the process. Land Rover has had its ups and downs but is currently seeing some of its most profitable quarters. Still, if Ford, with 100 years experience in the auto business, has not been able to make a success of this company, how can anybody expect the next buyer to have any greater success?
Maybe it does come down to the marketplace. Both Indian bidders are clearly confident that these luxury brands will woo the large and growing class of upscale buyers at home. But what about the workers; the 20,000 employees whose lives are so closely dependent upon the success of these brands? They are likely rooting for the successful bid to come from Jac Nasser, former Ford CEO and current front man for One Equity Partners, a private equity bidder who has thrown its golden fedora into the ring. The workers may be in for a surprise, however, as one of their own will inevitably have to cave to the suits standing behind him with freshly sharpened axes and a board demanding nearly immediate results.
And, of course, this is not to even surmise what will become of the brand equity once it is wrested from its traditional British heritage and reformed on the Indian peninsula. The irony of the British occupation of the India of old won’t be missed by many, to be sure. Perhaps all this is why Mercedes-Benz, BMW, Audi, Porsche, and other of the world’s legitimate luxury builders have remained on the sidelines during the bidding. They know how long the road lies ahead.
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