Tata motors’ acquisition of Jaguar and Land rover: A research study

Abstract

The luxury car industry in the developed markets is not highly concentrated, and many different brands with varying strategies compete against each other. The rivalry is quite intense, especially among the major players that include Audi, BMW, Mercedes-Benz (and Toyota’s Lexus Motors in the US). These companies not only compete vigorously for market leadership in the major luxury car markets across the world, but also for the recognition of being the leading luxury brand of vehicle from the perception of the consumers. In recent years, the competition has also moved to emerging markets and the companies are scampering to gain a stronghold in these areas to capture the burgeoning middle class. Audi, BMW, and Mercedes-Benz openly compete and use stimulating advertisement campaigns to drive home their messages about their cars being superior in terms of both performance and design. They also compete strenuously on technological modernization, with each claiming that it is leader in the industry in terms of technology. In recent times, the stronghold of the big western manufacturers has been challenged by the Asian luxury brands such as Acura, Infiniti, and Toyota, that pose a significant threat. Prominent Asian car manufacturers have already pitted themselves against western carmakers in the advanced markets by injecting new brands and by offering consumers cheaper vehicles with improved fuel efficiencies. The massive nature of the investment leads to high sunk costs. This creates a huge barrier to exit from the industry. Hence, competition remains high since the companies choose to stay in the market even during downturns.