Tata Buys Land Rover, Jaguar - But Can It Revive the Brands?

Yesterday’s big auto industry news was Tata’s (TTM) purchase of Land Rover and Jaguar for $2.3 billion, barely half what Ford (F) originally paid for the brands. However the price shouldn’t be seen as a fire sale on the part of cash strapped Ford, but a function of two brands that have lost significant brand equity over the years. Sales of Jaguar and Land Rover have been falling for some time and while both brands still hold glimmer of their former glory, they’re still in danger of falling into obscurity.

The purchase of Jaguar and Land Rover shouldn’t be viewed as the purchase of two luxury brands a company can add to their portfolio; it should be viewed as a turnaround project as both brands are in need of significant revival.

This is going to be Tata’s first experience in managing a luxury brand in the automotive sector and I wonder if they have the capabilities to build those brands, or if they’ll just became another footnote in the history of the failed owners of Jaguar and Land Rover. After all BMW has built arguably the strongest luxury automotive brand in the world and they couldn’t revive Land Rover; and Tata’s experience is more along the lines of building cars on par with Kia.

Tata has to engineer a brand revival on par with what Volkswagen A.G. did with Audi, which is no small task to say the least. While I don’t think either brand has fallen as far as Audi did in the 80s, they’re not especially relevant either. Repairing the Land Rover brand and returning it to profitability will be especially difficult as the company is on its fourth owner since the 90s, and the brand currently exists in an odd place of having significant luxury car credibility but not generating significant sales either.

In Land Rover and Jaguar, Tata has taken on arguably the largest automotive brand rehabilitation challenge outside of Detroit, as they didn’t buy two luxury brands they bought two brand fixer-uppers. Only time will tell if they’re truly up to the challenge.

Disclosure: At the time of publishing the author didn’t own a position in any of the companies mentioned in this article.