Tuesday, Jun 28, 2022
Outlook.com
acquisition jaguar & land rover

The Jagged Edge

A global slump menaces Jaguar and Land Rover. Tatas, their owner, bets on new markets, products.

The Jagged Edge
The Jagged Edge
outlookindia.com
-0001-11-30T00:00:00+05:53

In tune with recessionary trends, sales in the world's biggest luxury car markets—the US and Europe—have been flagging. While Jaguar took a 33 per cent hit in US sales in 2007, Land Rover's numbers dropped by 13 per cent. The numbers are similar for Europe. Says Piyush Parag, automobile analyst with Religare Securities: "Globally, luxury cars have been seeing a slump for 7-8 months. Most cars are fully financed and financiers aren't coming up with new schemes, so this market is sliding rapidly."

Moreover, apart from the challenge of servicing the significant interest burden from the $2.3-billion deal, there are concerns that investments will shoot up. In a few years, new global carbon emission norms would come into effect: JLR's high-octane models will need funding to meet them. Also, while Land Rover has turned around in recent months and finished 2007 in profits, Jaguar is struggling and would need nurturing. And that means more investment. Warns former Maruti Udyog MD Jagdish Khattar: "It is a challenge for Tata Motors. But they have had a success in the Daewoo Motors takeover, so they must have a gameplan here too."

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