The question of the day seems to be: Should the Tatas delink their name from the brands of Jaguar and Land Rover? Even if the answer appears to be obvious, it may be instructive to review a bit of auto history. Remember the 1980s, when the Lexus, Infinity and Acura gave the luxury auto majors of Europe and the US a run for their money? That the Lexus was from Toyota, or Infinity from Nissan or Acura from the house of Honda, was virtually not at all known in the public domain.
Imaging by Malay Karmakar / Mint
The reasons weren’t far to seek. In those days, the average offering of cars from the stables of Toyota, Honda and most other Japanese companies were considered downmarket in the developed world of the Western hemisphere. Under the circumstances, offering their cars in the snooty luxury segment in these markets would have had the same reception that offerings from Hyundai or Kia Motors from Korea may have today in the same markets. This is because the image of the Japanese auto industry in the 1980s was what the Korean car industry has today in the world market. Good, but not good enough. That’s why, even though Hyundai Motors or Kia Motors of Korea makes very competent cars, for various reasons they aren’t accepted among the blue-blooded brands of the world. It was only after Japan’s big auto firms asserted their superiority among the world’s leading auto firms that the parentage of the Japanese luxury brands came out of the closet.
In more recent times, there have been at least three big auto brands that have struggled and are still struggling with the issues of brand identity. For example, today Rolls-Royce, Audi, VW (Volkswagen) and Skoda brands all come under the parentage of Volkswagen. While Rolls-Royce, by and large, maintains its super luxury marqué image, there is confusion concerning the management of identities of the other brands. Audi is distinctly pitched as a luxury brand. Volkswagen itself is pitched somewhere in the middle as a competent brand with a premium for quality. But the Skoda, with its Czechoslovakian origin, acquired by Volkswagen in a controversial $650 million deal in 1991 (Volkswagen acquired Rolls-Royce in 1998), is the poor cousin in the Volkswagen family of brands. It doesn’t help that Skoda in Czech means pity or shame—a moniker that sits well with Skoda’s former image in Europe. Italian girls were known to reject boyfriends who drove Skodas! The confusion is made worse when you lift the hood of a Skoda to find the four interlocking?rings?of Audi in many of its parts. This enables Skoda’s cheaper brand to cannibalize Volkswagen’s higher brands,?impacting its profitability. In a move that confused the brands further, Volkswagen’s realigned its brands last year to group?Skoda with Rolls-Royce (Bentley) as the “classic”, while Audi, SEAT and Lamborghini were clustered as “sporty brands”.
If the Japanese cars of the 1980s, or those of Korea even today, do not find ready acceptance in the luxury car?segment?of the?world,?well,?it may be a little premature for the Indian auto industry, notwithstanding what Tatas means to us here in India.
World branding industry, whatever?else drives?it,?is not?dictated by the patriotic sentiments of any people. True, India may be a brand of sorts in?the?world?today,?but?not?for?reasons of its engineering quality and research?and development (R&D).?Yes, if we were taking over a Silicon Valley jumbo brand, the Indian association may?not?at all be?a?negative.?But in an industry in which brands are driven by vintage of quality, R&D and engineering excellence, India may as of now?not?even? be?on?the?radar screen, our patriotism notwithstanding.
However, before we underscore an answer to the opening question, based on the examples above, let us take a quick look at the parameters that drive a brand. These parameters typically include image, quality, price, market, recognition, association, interface with customers, location and targeted lifestyle. Branding may also be aimed at minimizing cannibalization of other brands (though as stated earlier in the case of Volkswagen, sometimes the results may well be to the contrary).
How does the Tata brand compare with Jaguar or Land Rover on these parameters? Does the current Tata auto brand sell to the same clientele as that of Jaguar and Land Rover? No. Are the brands in the same price range? No. Is the market perception of their images, namely, the Tatas on the one side and that of Jaguar and Land Rover on the other, similar? No. Are their buyers in the same class? No. Does the world recognize the Tata brand as readily as that of Jaguar and Land Rover? No. Is the Tata brand associated with the same category of product as is represented by Jaguar and Land Rover? No. Will the Tatas and the other two brands interface with the same customers (even in terms of the countries where bulk of sales are expected to happen)? No. Of course there is almost no likelihood?of any?shared platforms or interchangeability of spare?parts?between Tata’s autos?and those?of the?two?posh?brands.?On any of the above parameters, the Tatas are as different from Jaguar or Land Rover as chalk is from cheese.
In fact, today Volkswagen finds to its chagrin that its acquisition of Skoda—thanks to its long-standing down market image—has impaired its ability to charge more for its products capitalizing on the image of German perfectionism. In a way, perhaps in acquiring Skoda, Volkswagen married a brand “below” it. But surely the Tatas’ acquisition is way “above” it, in terms of auto brands? If so, will not a similar phenomenon come into play for the Tatas, following their acquisition of the far more upmarket Jaguar and Land Rover? If the Tatas are not to be seen marrying above their league in the world of auto brands, maintaining a separate identity of these brands will be a distinct advantage.
V. Raghunathan is CEO, GMR Varalakshmi Foundation. These are his personal views. Comments are welcome at firstname.lastname@example.org