Foreign acquisitions: Strategic importance or Status symbol of the power game?

Friday 07 December 2012, 12:03 PM by

The chase for acquiring a strategic stake in British super car maker Aston Martin by our home grown auto major Mahindra and Mahindra Limited (M&M), raises some questions concerning the motives behind such endeavours. Evidently, foreign acquisitions seem like a relatively new concept for Indian automobile industry, with just two names like Tata Motors and M&M, having some experience in this regard.

Tata Motors, the country's largest automobile maker, shot to global recognition when it acquired Jaguar and Land Rover businesses from Ford Motor Company in 2008. So far, the Indian auto giant's gamble has paid off great dividends, with both Jaguar and Land Rover recording their best sales figures in history. There has been a complete turn around in fortunes of the British sister companies, which have expanded their presence in many international automotive sectors, post the take over four years back.

M&M, the country's leading utility vehicle maker, procured a 70 per cent controlling stake in the South Korean auto giant SsangYong Motor Company last year in February 2011. SsangYong Motor Company is the fourth largest South Korean automobile manufacturer and the Indian firm has been quite upbeat with its acquisition, since its takeover. Evidently, M&M has set some great expansion plans with SsangYong and has planned to introduce the brand in several overseas markets. The company has already launched its most expensive product Rexton Sports Utility Vehicle (SUV) in Indian utility vehicle sector, which is actually borrowed from the South Korean subsidiary.

M&M is again in the spotlight of international automobile industry, due to its name being associated as a possible future owner of the British super luxury sports car maker Aston Martin. There is no apparent link up between the two brands but considering the immense success of Tata owned Jaguar Land Rover, nothing can be said with surety about the proposed deal. However, sources suggest that the Indian utility vehicle maker is one of the leading favourites capable of wrapping up the Aston Martin deal.

Industry experts believe that Aston Martin deal could help M&M in establishing itself as a top global automotive brand, besides gaining reach to an exclusive high heeled clientele across the world. Further, the Indian brand has never been associated with fancy power games and if it is interested in Aston Martin, then it must have set some concrete future ambitions. Jaguar Land Rover deal turned in wonderful results for Tata Motors along with providing it with a previously unforeseen customer reach. Therefore, M&M and Aston Martin merger has all the potential of becoming the biggest thing to happen in automobile industry, for the ongoing decade.