A year ago, Tata Motors bought the Land Rover and Jaguar brands from Ford Motor Company for $2.4 billion. Today, Tata announced their first loss in seven years. The reason. Land Rover and Jaguar. Vikhas Seghal of Booz & Co into perspective (as reported by Bloomberg).
“Turning around Jaguar Land Rover is a Herculean task,” said Vikas Sehgal, a Chicago-based partner at Booz & Co., an industry consultant. “It’s challenging because a company focused on the mass market with basic technologies is trying to turn around a premium marquee brand with complicated technologies and low volumes.”
“The bridge from the Nano to Jaguar XF is probably the biggest that exists in the industry,” Sehgal said. “A $2,500 car and a $100,000 car: no other company in the world has a portfolio that wide.”
From the moment Tata bought Land Rover & Jaguar from Ford, a Silent Problem was underway. Even if the economic downturn hadn’t occurred, numerous challenges were on the horizon. Tata saw opportunity, when they should have taken a second and then a third look. Ford saw a way to shore up their balance sheet, and won.
With the introduction of the Nano, the world’s cheapest car just a month away, Tata Motors had the opportunity to become a dangerous competitor in the marketplace. Instead, they just wasted that opportunity. Their momentum has slowed and now they’re forced to play defence. This is a perilous position to be in.
Yes, Tata had a Boo Boo…
Bottom Line: Acquisitions are filled with potential problems, many of them of the silent variety. In this case silent problems related cultural fit, process & procedures and of “fit” are but a few. A year ago, Tata Motors was on the fast track, today they could easily be destined for the junkyard.
