It certainly sounded like a bad joke in 2008 when Tata Motors acquired Jaguar Land Rover (JLR) for £1.1bn. Ratan Tata, the charismatic chairman of Tata, has always had a passion for British brands. It was he who drove the acquisition of Tetley Tea in 2000 and then Corus, formerly British Steel, in 2007. But when he announced that Tata was about to buy two of Britain’s biggest and most ailing automotive brands in 2008, in the middle of the global financial collapse, even his own executives were uncomfortable.
But there can be no doubt, four years on, that Tata has achieved something with JLR that appeared almost impossible in the world of modern marketing: to make British automotive brands successful again. Sales were up by 37% in the last financial year, to £13.5bn. More importantly for the automotive sector, where billions in sales can still mean millions in losses, JLR is profitable. In fact, Tata is making more in annual profits – £1.5bn – than it cost to buy the two brands back in 2008.
In truth, while Jaguar is performing well, the Land Rover brand is the one doing the heavy lifting for Tata. In July five Land Rovers were sold for every Jaguar. The Evoque, in particular, has been a stellar performer since its launch last year, accounting for almost a third of Land Rover sales. Most analysts estimate that JLR is now worth around £10bn – not a bad return for four years’ work.
So what did Tata do so well? How has it succeeded where so many others have failed?
Well, it helps to buy brands from people who know what they are doing. There are two variables to consider when estimating a brand’s potential. First, there is the assessment of brand equity.
We can think of this as the God-given raw materials the brand has been endowed with. Second, there is the management approach that has been used to steward the brand. These are equally important but rarely do they coincide.
You usually get great brand management without the brand equity (look at the adventures over at Premier Foods) or huge amounts of brand equity combined with poor brand management (consider the chaos at Research in Motion).
In the case of JLR, Tata was lucky enough to acquire brands that had both advantages already in place. In terms of brand equity, both Jaguar and Land Rover have global awareness, strong heritage and distinctive associations that work just as well now as 40 years ago when both were in their heyday. In Ford, Tata was also fortunate to be buying from a company that manages brands well. Both brands had new production facilities and new models in the pipeline, like the fine-handling XF saloon and the Evoque – all Ford initiatives.
But Tata did more than acquire success from Ford. Perhaps the biggest single strength of the Tata approach has been its ability to step back and allow both brands to exist within the Tata Motors portfolio without Indian interference.
Despite Ford’s excellence there had been grumbles that the Americans took too much control when it came to marketing and product strategy at their British brands. Tata, in contrast, has proven adept at making the big calls and then letting the brands get on with it. Ian Callum, Jaguar’s director of design, spotted the change immediately: “Tata has been decisive in choosing the management, but once they’re in place they leave people to get on with it, unlike Ford. They’re long-term, committed, patient owners. All the things you want.”
There has also been a recognition that neither brand needed a costly repositioning or to stand for something new. Rather, both Jaguar and Land Rover have been intent on brand revitalisation – a more subtle approach where the DNA of the brand is not changed, but rather revisited for modern consumers. Global brand director Adrian Hallmark speaks of “rebirth”, “relaunch” and a strategy to “reinvigorate Jaguar cars globally”. But never does Hallmark fall into the arrogant trap of thinking these precious brands need to be fundamentally altered to gain success. For all the seismic changes at JLR, the branding work has been subtle and entirely in line with the heritage of the two strong brands.
Finally, there is China. There can be no 21st century brand success without China playing a role and the Chinese are showing enduring interest in both brands. The British motoring reputation appears to work well among premium Chinese consumers and, from a base of 5 per cent of JLR’s sales in 2005, China will become the company’s biggest market within the next three years.
Sales last year were up by 76 per cent.
So, did you hear the one about the company with a German boss, British manufacturing and owned by Indians? Nobody is laughing now.