The Tata Group has approached both BMW AG and the Geely Group in its hunt for partnerships to share some of its financial burdens.
According to a recent Bloomberg story citing people familiar with the situation, an unconfirmed partnership in the global automobile industry is in the offing. Current reports have it that the Jaguar Land Rover (JLR) parent company Tata Group has made decisive moves seeking partnerships with German multinational BMW AG, and China’s Zhejiang Geely Holding Group Co.
Apparently, Tata Group has reached out to these two major firms, but is also looking to find more partners and might seal collaborations with a few more companies if discussions prove fruitful. The Indian company’s primary objective for seeking out these alliances is to significantly reduce its operational costs, and also to spend a lot less than it currently is doing, on its electric car products.
So far, there is no confirmation about any of these talks with Geely expressly denying it in a recent statement, saying there have been no deliberations with Tata. BMW did not make any comments at all.
The development and production required with new technology are extremely expensive and even the most established car brands sometimes run into problems because of the sheer numbers required. At the same time, it would be impossible for these companies to remove focus from the need to innovate as they generally risk relegation if they toe that line. According to Indian auto analyst Deepesh Rathore, Tata has realized this and is moving to solve the problem. The analyst believes:
“Carmakers need to invest a lot of money in developing new technology, and Tata doesn’t have deep pockets to keep funding development. You don’t want to be left behind, especially in the luxury segment, and at the same time, Tata doesn’t want to let go of JLR, which is its crown jewel.”
The Jaguar Land Rover brand has so far not been without its struggles and this might be something serious enough for the other brands to consider if they are really thinking about a partnership with Tata. For example, JLR has had problems in China regarding quality and business with dealerships. Even though the company seems to have solved these issues especially as it reported that sales in the area have been stabilized, bringing reported losses a lot better than estimated, it would not be entirely surprising if potential partners still consider this a problem.
The JLR brand has been owned by the Tata Group since the 2008 acquisition reported to be worth $2.3 billion. Tata chairman N. Chandrasekaran has said that the company doesn’t plan to sell JLR and is only seeking partnerships to help with innovation and development.
As Rathore has suggested, partnerships seem to be the best course of action for automobile companies who are looking to expand the growth of their firms and innovate as well. Months ago, an alliance was created between Volkswagen AG and Ford Motors to collaborate on electric and autonomous vehicles. In the same way, the Peugeot’s parent company PSA Group has also merged with Fiat Chrysler to pull resources for bigger and better offerings and features.
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