03 December 2009

Jaguar & Land Rover Profitable Already

It's funny how car brands are bought with the intention of them becoming profitable, but they just end up costing...and costing. The blame often goes to the brand itself, but rarely to the buyer. GM bought Saab and has lost money ever since. It may cost it much more to divest itself of the marque. BMW bought profitable MG Rover and quickly got it into red ink. It blamed MGR, calling it the English Patient and got rid of most of it in such a way to ensure its demise. The arrogance shown by BMW masked its incompetence in ruining a good company. Ford bought a few brands, calling them its PAG Group. Ford rarely made money on any of them and is now trying to get rid its last PAG brand Volvo.

Now Tata has acquired two of those ex-Ford PAG brands (Jaguar & Land Rover) and everyone expected this to be another failed venture. It didn't help when the world's economy went into a tail spin just after the purchase. Yet while the world markets are still struggling, JLR has suddenly turned losses around and is starting to make money! Even Toyota can't do that presently. How has this happened?

Well the Birmingham Post stated that "JLR posted a profit of £22 million for the September quarter compared with a loss of £49 million in the quarter before, thanks to slimmer operating costs". It then quoted Prof Bailey, who said “Sales figures were boosted by improvements in markets like China and the UK and through sheer hard work by the firm....hats off to JLR for a strong set of results. The firm has got on with the job in hand of developing wonderful products and cutting costs to compete internationally - without much in the way of government support."
So hard work and cost cutting is paying off, and doing so quickly. It's not rocket science, is it?

The bottom line: A lesson for all those companies that bought brands and failed.

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