News Column

Let's chat: Do 'car marriages' help us in one way or other?

February 27, 2014

Mustafa: Let's look at who owns who and how this can be helpful to the customer, basically you and I.

Jude: Recently, there was a story of Porsche being dragged to court by some shareholders over its wanting to buy the Volkswagen Group (its current owner) and the deal fell through.

Mustafa: What happened was that at that time the VW share price was so low, so Porsche with a bunch of Arabs and other investors saw an opportunity to take over VW. But of course information leaks. When people know you are going to be taken over you get some "fat". So VW's share price went up and the Porsche people could not afford and in the end, VW bought Porsche.

Jude: It is a funny story of a hunter being hunted and how people are now in court over not properly advising Porsche officials.

Mustafa: The investors are now suing the management of Porsche. But these deals happen a lot. There was that short lived "wedding" between Daimler and Chrysler. It was one of those "celebrity weddings" like Germany is coming to the US. Something pompous like Kanye West and Kim Kardashian.

Jude: But it helps in a way. In that marriage Chrysler benefited most from the German technology that was applied in Jeeps and other related products at the time. Modern Chryslers have Mercedes Benz technology supported engines. Look at the BMW and Range Rover merger.

Mustafa: Land Rover actually not Range Rover.

Jude: The marriage made a complete turn for Land Rover and some people say BMW "panicked" to "divorce" the partnership.

Paul: When BMW bought Land Rover, at that time they only had saloon vehicles. They didn't have SUVs. Among other factors, they looked forward to sharing the SUV technology of Land Rover. Out of that marriage, we got the first product-the Bafudde Range Rover code named P38. It came with a BMW engine. The later model the L322 is called Vogue. We also have a Vogue in the Bafudde series. But the L322 actually had a BMW engine and transmission. It is the same in the first generation BMW X5.

Mustafa: I think that is a very interesting example of platforms.

Jude: This means that the two do share parts.

Paul: Yes, they share parts. The interconnection was that close. However, the unfortunate bit was that at that time, BMW was losing 1m a day. There were some cultures at Land Rover that were not compatible for business. People were paying themselves very high salaries. Business was also not so good for Land Rover at that time.

Mustafa: But you know one interesting thing now is that Tata, which bought Land Rover has built this "firewall" and their culture around Jaguar and Land Rover. They have turned around the company and the cars that are coming out today are good. The current Range Rover has received rave reviews, many people are saying nice things about it. The Jaguars that are coming out now, the XJ and XF are much better.

Jude: So should we say that it is an issue of management and the Indians are doing it better than the British? Although I know they still have some British people. They cannot give you everything at 100 per cent without them having a hand in it.

Mustafa: I think that is why I mentioned firewall. If you try to merge them you will have problems of culture among others. For Tata to own Jaguar and Land Rover it is basically an issue in the books but the British remain in the background.

Jude: It is like the Swedish with Volvo being sold to Geely, a Chinese firm but the company is still based in Sweden.

Mustafa: I think it is a German problem-the idea of BMW and Land Rover. If you look at the VW Group, they have Audi, Bentley, and Lamborghini among others. There was this review I was reading about the Bentley being a super car with all bells and whistles but the buttons were actually VW buttons. These are buttons you can find in a Passat. If I want to spend a lot of money to buy a Jaguar, I don't want to find Tata buttons.

Jude: I know, but one thing that benefits these mergers is that it becomes cost effective for these companies. Looking back at the VW Group, you have sharing of parts. The VW Touareg, Audi Q7 and Porsche Cayenne do share parts. These are things Ugandans should know. That the engine of a Cayenne could work in a Q7!

Paul: The Audi Q7, Touareg, Cayenne transmission, engine and suspension are exactly the same. It is only the bodies that change.

Jude: Some Audi A4s can share side mirrors with the VW Golf Mk4.

Paul: Actually someone joked about car mergers that their cars come out of the same building through different doors with different car badges.

Jude: There is this joke I usually see in some South African auto magazines. When they are reviewing an Audi A3, they usually say it is a VW Golf with a different skin or an expensive Golf.

Mustafa: To me that does not make much difference. Transmission and engine technology fundamentally do not change much. What gives soul to an Audi that cannot be given to VW? Is it just a shape, are their other things that change?

Paul: I think Mustafa, you are touching a very important point-brand loyalty. For a long time some people have not known that Ford and Mazda come from the same stable. They just come out of different doors with different badges.

Jude: Actually, experts say that Mazda helped Ford build their Escape SUV.

Paul: Like VW will keep Audi is as a premium brand. There are people who are so loyal to the brand that they will pay anything to have it. You see, when BMW parted ways with Land Rover they insisted on taking the MINI with them.

Mustafa: There are some specific things that are unique. For instance, if you look at cars in the same segment from the same group, you mentioned the Mazda Tribute and Ford Escape. They are the same but different. What makes them different? Styling is different.

Paul: The fundamentals are the same. When people buy a new car, they don't buy for the basic functions but for ego, emotions, status. If someone bought an Audi Q7, in terms of status, he will feel way up there than someone in a VW Touareg yet they are almost the same. Audi will have some extra features such as the air suspension. It is different than the Touareg's. It can be adjusted to three different height levels and for that, there is a heavy price tag.

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Source: Daily Monitor, The (Uganda)

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