On the back of recent results published by Tata and Jaguar Land Rover, Warwick Business School Associate Professor of Strategic Management Christian Stadler looks into the car industry.
Dr Stadler said: “JLR has been a great success for Tata. The Indian economy has grown by less than five per cent over the past two years. This affected the mass market, whereas the market Jaguar Land Rover is targeting, the high end, has been doing well.
“China is an extremely important market for JLR along with other emerging markets. Whenever economic strains strike the mass markets feel it more, because rich people can still afford to buy cars.
“Most acquisitions fail, but Tata has used a new approach that seems to be used by a number of successful Indian conglomerates. The acquisition is followed not by ruthless integration but partnership. They take a very hands-off approach. They might shape the composition of the top management and provide capital but do not try to run the day-to-day operations. Most Western companies are considerably more interfering. When Ford owned JLR, they certainly were more involved. Synergies are less of a concern than for Western companies.
“Tata supported JLR financially at the beginning and of course they also made sure that communication between JLR and Tata Motors was in place, but JLR have more or less been allowed to do their own thing, especially where the operations are concerned. That is something of a new phenomenon.
“JLR CEO Ralf Speth has come from BMW, which is also doing very well. This might be a coincidence but it does point at ‘thinking along the same lines’. He is very down to earth and not a charismatic dreamer. He knows the ins and outs of the car industry and gets things done.
“The success of JLR is excellent news for the local economy and for growing jobs. They will continue to expand and create more jobs. They have been using Ford engines, but now JLR is investing in its own engines at a new factory in Wolverhampton, and once they are in production that will mean more jobs for the UK.”