India’s second-largest industrial corporation purchased JLR from Ford in 2008 for US$2.3 billion – a decision that many felt would backfire for Tata, given the poor form of the two British manufacturers and the lack of synergy between them and Tata.
But in around three years, JLR has been transformed into the most profitable division of Tata Motors, raking in US$1.7 billion in the 2010-2011 financial year ending March 31 (up from US$79 million in the previous year). Last financial year, global sales increased 26 per cent as Tata focused on expanding into Russia and China.
Meanwhile, the US$2000 Tata Nano – expected to be a guaranteed winner in India – has struggled to take hold, and is now slipping backwards fast.
Tata initially planned to sell 500,000 Nanos every year, but has only just passed the 100,000 mark after production started in 2008. September 2011 sales were 47 per cent below the same month in 2010.
The Nano was crippled by a year-long delay to production and the lack of a comprehensive dealer network in rural regions. A number of vehicle fires have also done little to help its reputation.
An executive from a rival manufacturer in India told the Financial Times that Tata failed to appreciate the Indian psyche when it launched the Nano.
“Nobody wants to buy the world’s cheapest car.”
Analysts suggest Tata may have taken a complacent approach to the Nano while putting significantly more effort into resurrecting JLR, for which it brought in experts from outside the company to assist in the process.
Although Tata has recently launched a new advertising campaign for the Nano, introduced a number of financing options and added dealerships to smaller cities, many analysts believe the company should again seek outside help to resuscitate the dying Nano.
Why do you think JLR is thriving under its new Indian owners while the Nano is struggling to keep its head above water? Let us know your thoughts in the comments section below.