Why Tata Makes Sense* UPDATED
UPDATE: Chairman Ratan Tata himself denies the report. I think that’s pretty damn definitive. This will go down as yet another reason why I’m disheartened in the Saab sale.
GENEVA — Tata Motors Ltd. Chairman Ratan Tata Tuesday denied a news report that the Indian car maker has made a bid for the assets of failed Swedish auto firm Saab AB.
“No we didn’t,” he said on the margins of the motor show. “But I know another Indian company has: Mahindra.”
Indian newspaper Financial Express reported earlier in the day that Tata had made a $350 million bid for Saab’s assets.
Its rival Mahindra & Mahindra Ltd. has confirmed its interest.
As you can read below, The Indian Express has indicated that Tata has placed a bid for Saab’s assets. I heard that they were snooping around a few weeks ago from a very reliable person who would be in a position to know, but promised the source I’d keep my mouth shut (even to the crew, but they might have picked up on my hints when I started telling them how much I enjoyed the Evoque test drive). At the time I just kept my fingers crossed and hoped that it would come to fruition. This is the first public confirmation of this fact, and I’m waiting for confirmation from other sources to make sure it’s true. I’m cautiously optimistic. (Now I know why they’re not returning my email as the story has been shot down).
Quite frankly, this whole bankruptcy process has been depressing. I haven’t posted much because there hasn’t been much for me to hope for. While it’s fun to speculate over potential owners, none of them have really been a home run to me, so I’ve kept my nose out of most of it. A fact that has been clear as the bankruptcy process unfolded is that each party is coming at Saab’s assets with their own interests at mind first, not Saab’s or the faithful Saab community. No one is buying a brand out of the goodness of their heart or because they think Saab is a great going interest on its own, they want to use the people and resources of the company to leverage their own company, and Saab the brand is a bonus. So in the eyes of the Saab fan, what would be the perfect owner given these conditions? What potential owner would actually have the most incentive to keep Saab Swedish and build cars that we would consider true to the heritage of the company? Youngman’s interests have been clear from day one– their business model has been amalgamating whatever parts and resources they can license to create their own brand. Saab would be a crown jewel for them, but more the means to an end to their own ambitions in China. That German automaker would actually be a very good fit and find incredible efficiencies no doubt, as was studied by Swade in an excellent post. But as has been pointed out, is there really room for Saab in that portfolio? Wouldn’t Saab take the back seat to BMW at every turn? Mahindra and Mahindra has vast resources and seems to have good intentions to make it as a global automaker, and Saab has key pieces of that puzzle that will help them get there. It appears they’re looking to follow their countrymen at Tata who led by example with their acquisition of Jaguar Land Rover (JLR), and I hope if they’re successful that they do just that. But Tata themselves? Now that’s something, and here’s why.
As most know, Tata bought Jaguar and Land Rover in 2008 from the remnants of Ford’s Premium Auto Group, which once included Volvo and Aston Martin. Ford had developed an all new V8 engine and aluminum architecture, invested billions to modernize Jaguar, and inherited an entirely reworked Range Rover platform from BMW who they themselves purchased Land Rover from a few years before. One could compare Jaguar and Saab’s sales as a tale of what to and what not to do when taking over a car company. Tata was an invisible hand that swept in and capitalized the launch of the new XF and XJ for Jaguar, making sure to maintain and even strengthen the brand’s ties to England. While many xenophobic auto writers feared that the company would cost cut their way to a new product range, they used their vast industrial wealth (which includes huge steel manufacturing operations) to refocus and modernize the brand. They took design risks with lead stylist Peter Horbury in charge, all of which paid off. Jaguar sales have skyrocketed under Tata management, and Land Rover isn’t far behind.
One criticism Saab has received in the last decade is how many concept cars were released, yet how few elements of those concepts ever made it to reality. As new owners, Tata kept the strategy that Jaguar executives had already put into motion under Ford’s ownership, that bold concepts would be followed by near identical as possible production versions. With their C-XF concept, they shaped their current range first with the XF and then front styling of the XJ, shaking up the staid image of Jaguar. Their Land Rover division went a step further, after they floated the LRX concept, having received incredibly positive reaction, they went about making the production version as close to spec as possible. Since the Audi TT I haven’t seen a car more closely resemble a radical concept, and the reaction in the press and in sales has been tremendous. As I’ve shouted for years here on this blog in comments, if only Saab could have built the original 9-3X concept, we might have seen a similar effect. Alas, GM wasn’t having any of that.
Why people don’t understand the idea that a small but well engineered premium crossover is a good idea is beyond me, even some of our own commenters don’t get it. Don’t knock the Evoque until you’ve driven it, besides the obvious nods to Land Rover design heritage, it feels every bit as Saaby with it’s 2.0T engine as you’d want, much more so than a 9-4X. Even Swade himself noted that at the 9-4X reveal in Los Angeles, the nearby Evoque stole all the attention. Its magnetic damping system works every bit as well as the Saab Drivesense and does a fine job making it feel more like a car than an SUV. For my money, with a few tweaks, the 2002 9-3X concept would work every bit as a 2015 model as it would have a 2004. Slap that body on an Evoque, and take some pressure off the line in Halewood where the workers can’t keep up with demand. You don’t even need to change the engine, Saab engineers would certainly have fun tweaking the 2.0T Ford EcoBoost engine, and it might even be able to be engineered to work in the current 9-3.
It’s pretty clear that Saab would get a lot out of Tata, but what does Tata get out of Saab? Some have suggested that Tata might be looking to spin off JLR in order to divest themselves of the future investment necessary to compete. This may inevitably be true, but Saab offers them an opportunity to capitalize on development of the very pieces of the puzzle they’re missing: a smaller architecture and hybrid/turbo tech. What really gets me excited is the direction that they seem to be focusing JLR since their stewardship began. Like all automakers, they’ve been more and more interested in reduced emissions and higher performance, and their recent initiatives into a plug-in Land Rover and their latest Jaguar concepts (more on those in a bit) prove that they need a reliable and focused hybrid platform in order to get these initiatives off the ground. They’ve invested heavily in these departments, but Saab engineering staff is a critical and cheap pickup in the larger scheme of development that they could use to their advantage. Saab as we know has extensive research already devoted into hybrid technology in the works, whether in conjunction with eAAM or in their own back office. The FWD Phoenix platform is designed with efficiency in mind and has the added bonus of being scalable to give Jaguar the small sedan platform they’ve been trying to get off the ground (ignore the rendering, it’s an artist’s impression not real). Were Tata to acquire Saab, it would fast forward their development and give them a crucial piece of IP (even though it still needs some finishing) to expand their lineup without starting from scratch. Unlike BMW, they need much more help developing a FWD platform. Jaguar and Land Rover’s headquarters in England are near enough to Trollhättan to allow engineering staff to overlap while keeping Saab engineers focused on special projects and the Saab range. And as far as brands go, Jaguar and Land Rover aim for a much different demographic than Saab with much deeper pockets. Saab fills the lower and overlap the middle end for Tata while allowing their other brands to remain true to themselves. If Tata has ambitions to become the next Toyota with their own line of domestic cars in India, the Phoenix platform would be like striking a gold mine.
Perhaps the most important two examples of why I trust Tata are the Jaguar C-X75 and C-X16 concepts from the past year, both designed and produced under Tata’s watch. Both are hybrids, and both are to my eyes incredibly sexy. If you haven’t seen them in the flesh at a major autoshow, you’re missing out. Incredibly, one operates in nearly identical ways to the Hi-Po Saab I advocated in Swade’s contest earlier last year. Basically the C-X16 uses its electric motors in much the same way Saab’s eXWD system operates, giving an extra torque boost when necessary, but in their case for extra performance. Think of them like a green nitrous button for insane passing power. Jaguar has every intent to build the car, but development of such a system for production could prove to be a costly endeavor. While they hope to develop a system from the C-X75 concept, by purchasing Saab, they could fast forward their track. Seeing that Saab already has the association with such technology, that could bypass many of the technical hurdles of getting such an ECU and system incorporated into their own range.
Jaguar has already announced it will built a limited run of the C-X75 supercar with partner Williams F1, which in Saab terms is like having built the Aero-X. Can you imagine an owner that would do this? They’re even going so far as to fit actual turbine engines to a few of them.
The main reason I love the idea of Tata ownership is because of their exemplary stewardship and of Jaguar and Land Rover, notably their thoughtful risktaking through design but more importantly their fundamental commitment to keeping the cars rooted in their home country, the UK. They understand the value of brand, and also have shown how to take advantage of market conditions, efficiencies, and design constraints to position themsevles perfectly into their own niches. Another reason I’d love this to work is because before I fell in love with Saab, I was a Jaguar nut. I took my driver’s exam in an XJ6, and will always remember my first experiences falling in love with car culture sitting illegally in the back of my dad’s old XJS convertible while cruising at highway speed. Their idiosyncratic and offbeat heritage is the closest to Saab’s, and they have always represented an alternative to the mainstream choice in their class.
So all of this is really just building a case as to why I see Tata as the prime candidate at this point. Whether or not it actually happens is anyone’s guess, the administrators hold the cards and we’re all left scratching our heads powerless to the outcome. I’m actually thankful for that, and hope that they remain as tight lipped as they’ve been with regards to the eventual winner. I want the deal buttoned up solid before they peep. In the meantime, there’s at least one person at JLR (not to mention Carl Peter Forster who remains on Tata’s board) rooting for Saab’s survival and rebirth, and we have nothing but positive sentiment for him at SU. I for one hope he finally gets the chance to market Saab the way it deserves.