Jaguar Land Rover might buy another luxury brand that it doesn't need

Mon, Sep 25 2017

It seems that Jaguar Land Rover may be getting bigger in the near future. According to Bloomberg, the company is looking at acquiring some tech companies, and possibly yet another luxury car brand, provided that it fits with the current lineup of cars. On the surface, this makes some sense since Bloomberg reports that a whopping 78 percent of Tata Motors' revenue comes from luxury brands. And of course, any kind of tech acquisition could be useful considering the rapid development of electric and autonomous vehicles. But dig a little deeper, and a possible luxury brand acquisition just doesn't make sense for Jaguar Land Rover.

The main reason for this is that the Jaguar and Land Rover brands have the luxury market thoroughly covered. Both brands offer full luxury lines from entry-level to high-end ( Discovery Sport to Range Rover on the Land Rover side, and XE to XJ on the Jaguar side). They also cater to every kind of luxury, from sporty vehicles such as the F-Type and SVR Land Rovers, to cushy luxury machines such as the XJ and Range Rover. So whether the company is competing with BMW or Mercedes, Jaguar and Land Rover have the bases covered. There aren't any other typical luxury brands that would actually add anything to the current lineup. In fact, adding another conventional luxury brand could actually result in the new brand poaching existing Jaguar and Land Rover buyers, rather than picking up new ones.

What would make more sense for Jaguar Land Rover would be to pick up either a more mainstream brand, or an ultra-luxury marque. Neither Jaguar nor Land Rover has something that competes directly with the likes of Ford or Toyota in the mainstream game, or Rolls-Royce or Bentley at the top of the luxury heap. Picking up a brand in one of these segments would allow JLR and Tata Motors to actually expand offerings and pick up more sales, rather than having an internal competitor.

What path would be ideal? Probably going even farther upmarket. Supercar makers and ultra-luxury brands continue to sell well, and there's the potential for significant profit by layering on features and content to existing platforms. Perhaps the best possibility for a high-end complement to Jaguar Land Rover would be Aston Martin. Not only does it have a strong reputation and line-up, it also could handle both supercars and luxury sedans, thanks to its Lagonda sub brand. Of course it would require Aston Martin to be receptive to a purchase.

Going to a mainstream brand would be riskier, since the profit margins are slimmer, and the buyers are often less tolerant of reliability issues. But if the company were to move downmarket, Mazda could be a potentially strong brand, and one that would fit in with Jaguar Land Rover. The cars are stylish, sporty, and generally more upmarket than competitors, and the vehicles are reliable. Mazda would also offer some unique technology that could be distributed among the JLR line.

Regardless, adding more of the same to Jaguar Land Rover won't do much for the company. If it wants to expand, it needs to look at other markets, rather than locking itself up in the mainstream luxury world.

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News Source: Bloomberg
Image Credit: Vivek Prakash / Reuters

Jaguar
Land Rover
Tata Motors
Luxury
jaguar land rover

By Joel Stocksdale