Tata is buying the American luxury car brand Jaguar. There is expectedly a huge hue and cry. People believe that association of a luxury brand with an *Indian* company will dilute its appeal. It is all about perceptions after all. The Indian brands, this writer argues, are not up to the snuff as of now!
Is that true? The knowledge or advertising may not be there but the quality coming out of India in terms of manufacturing is pretty good. In fact, I have heard from many that on the quality front, Indian manufacturers beat the Chinese hands down, and if they can invest enough can become a serious challenge to the Japs and Koreans within Asia.
Ken Gorin, chairman of the Jaguar Business Operations Council, which represents Jaguar car dealers in the U.S., has said that Ford should sell the two brands to another bidder, One Equity Partners, a private equity arm of J.P.Morgan Chase (JPM). He’s reportedly concerned that the American public won’t accept a luxury-car brand such as Jaguar “out of India.”
Gorin, of course, doesn’t get to decide who buys the brands, and the deal is still open – with Tata being tipped to win in some reports. But he has a point: Indian manufacturing is only starting to gain acceptance internationally. Foreign car companies are increasingly looking to India for supplies of components and even complete cars – Suzuki Motor announced last week that a factory near Delhi will supply its planned A-Star car to Europe and elsewhere. But A-Star is not a luxury model.
The same perception issue is also at the heart of the controversy over the snub from Orient Express – a luxury hotel in UK to Tata. Tata has of course sent back a rejoinder.
Interestingly, out of the top 10 best hotels in Asia, 3 are from Asia – one from Tata and other two from Oberoi’s. Its not to say that service is great everywhere or luxury is as good in every Tata hotel. But opulence-wise, I feel Indian hotels are far ahead of the others.
Perceptions about the low quality of Indian products are also behind Orient-Express’s rebuttal of Tata’s moves for a closer relationship. Indian Hotels increased its stake in Orient-Express to 11.5 percent recently, prompting Paul White, the CEO of Orient-Express, to say a combination was not in his company’s interests. “Any association of our luxury brands and properties with your brands and properties would result in a reduction in the value of our brands,” he told Indian Hotels, which is expected to respond to the rebuff shortly.