Eyeing boom, JLR starts local assembly

Tata Motors will now assemble complete knock down (CKD) units of Land Rover Freelander 2 in India. The company, the country’s biggest maker of trucks and buses, on Friday announced the opening of an assembly unit of its subsidiary, Jaguar Land Rover (JLR), in Pune.

The sport utility vehicle (SUV) will be available in two variants —- TD4 SE Automatic and SD4 HSE Automatic —- starting from an ex-showrrom price of Rs33.89 lakh in Mumbai, pre-Octroi.
Hitherto, JLR cars were being imported in complete built units (CBUs) for sale in India.
CBUs attract a 60% basic import duty, while CKDs attract a duty of 30%.
Rohit Suri, head, premier car division, Tata Motors pegged the price difference on account of local assembly at `4-5 lakh, while pointing out that some specifications were different in the CBUs and CKDs.
Carl Peter Foster, group chief executive officer, Tata Motors said the cost of assembling the first few CKD units would be a bit more than the cost of production of CBUs as it was a new setup.   

JLR’s India sales quadrupled last fiscal compared with the previous year. Riding on the impressive growth, JLR believes it is only a matter of time before the market for premium cars in the country explodes.

For all that, however, India will take a while to catch up with China where JLR sold 27,500 units last fiscal compared with 891 in India, said Ralf Speth, chief executive, JLR.
Worldwide, JLR’s sales were up 26% at 2,43,621 units last fiscal.
There was also a difference in consumer buying patterns in the countries, said Speth. “In China, it’s good to show your success in your career through your car, but in India it’s understated, and we have a good understanding of the market and our cars are not flashy.”
He did not specify how many cars JLR hopes to sell in India or China this fiscal.

Assembling in India will help JLR grow volumes by selling its vehicles at prices competitive to those of rivals such as BMW, Audi and Daimler, which already operate plants in the country.
JLR is also in the process of finalising a partner for an assembly plant in China.

On the possibility of JLR manufacturing in India, Forster said it has to first achieve a critical mass in the country. It may also, at a later stage, look at sourcing components from India and exporting to other markets from here.

JLR is developing 40 products in the next five years, including engine, body and chassis derivatives, said Speth. India could be home to a research & development centre, too. “We have 500 people working for us in India and we will hire hundreds more in the coming years,” he added.

Tata Motors bought JLR from Ford Motors in 2008 for $2.3 billion.
JLR, which was loss-making at the time of the acquisition, has turned around in the last few quarters and helped its parent more than treble its consolidated net profit for 2010-11 to `9,274 crore (on sales of `1.23 lakh crore) from `2,571 crore in the previous year. The surge in profitability is in a large measure attributable to JLR, whose bottomline stood at `7,700 crore (£1.04 billion).