Mumbai: A year after Tata Motors Ltd, India’s largest auto maker by revenue, completed the acquisition of British marquees Jaguar and Land Rover from Ford Motor Co., Tata group chairman Ratan Tata launched the luxury car brands in the Indian market on Sunday.
Luxury brands: (from left) Jaguar managing director Mike O’Driskoll; Tata group chairman Ratan Tata; Land Rover CEO David Smith; Land Rover managing director Phil Popham; and Tata Motors vice-chairman Ravi Kant at the launch of the cars in Mumbai on Sunday. Abhijit Bhatlekar / Mint
The Jaguar range includes the XF, XFR and XKR models while the Land Rover brands coming to India will be Rover Discovery 3, Range Rover Sport and the basic Range Rover. The models will sell for between Rs63 lakh and Rs92 lakh.
“It’s something that’s quite memorable in the context of our history and heritage,” Tata told a news conference in Mumbai. “JLR (Jaguar Land Rover) has been well received and well established in India (in the past), but over the years this brand has been disconnected.”
He added that the brands may have become casualties of the world economic downturn, but he, as an Indian, was extremely proud to be owning them.
In terms of pricing, Tata has positioned the Jaguar and the Land Rover in the “super luxury” segment against high-end offerings from luxury car makers such as Bayerische Motoren Werke AG, or BMW, and Daimler AG of Germany.
To begin with, Tata Motors would retail the cars through the company’s flagship showroom at Ceejay House in Mumbai. Subsequently, it will be appointing independent dealers in five-six other metros, including Delhi and Bangalore, after gauging the initial response. Tata said there is no plan to assemble the cars in India and it will continue to be sold as a completely built model. Imported car models in India attract a duty in excess of 105%.
Financing for the cars will be offered by Tata Capital Ltd, HDFC Bank Ltd and ICICI Bank Ltd, company officials said. Deliveries will commence by the middle of next month.
Commenting on sales targets, Land Rover managing director Phil Popham said, “These are premium niche brands, so we are looking at relatively small numbers.” The challenge, he added, is to establish the brands here.
There could be pent-up demand for the Jaguar and the Land Rover in India that Tata Motors will be able to tap, said R. Venkatraman, partner at global consulting firm AT Kearney Ltd.
“These are order-to-manufacture cars,?which?can?only be compared with a Ferrari,” he said.
David Smith, chief executive officer at Jaguar Land Rover, said India will join the list of other emerging economies such as Brazil, China and Russia where the brands are selling well and contribute 20% of total sales
He said JLR is also looking at opportunities to use Tata group’s capabilities in information technology, tooling and sourcing of components. “Out team is working to see how we can expand the Indian supply base. It’s important to keep our focus on cost reduction.”
Smith said the management will have to take action to reduce labour costs. Presently, 23% of the total auto parts requirements are addressed by emerging markets and JLR plans to raise this to as much as 35%.
Jaguar sold 11,000 cars in China in 2008 and plans on selling 1,000 more this year, said Bob Grace, director, overseas operations. The company has no plans of starting an assembling unit in any of the emerging markets. Its UK plant is operating at 60% of its capacity, Grace said.
Tata Motors last week reported its first annual loss in at least seven years after sales of its luxury vehicles plummeted 32% in the 10-month period from June 2008 to March from a year earlier as global recession took its toll.
The auto maker swung to a net loss of of Rs2,500 crore in the year to 31 March from a net profit of Rs2,200 crore in the previous year. Earnings were dragged down by Jaguar and Land Rover’s pre-tax losses of Rs1,800 crore in the fiscal year gone by.
The company is seeking guarantees for the £340 million (Rs2,709.8 crore) loan sanctioned by the European Investment Bank and other loans from UK-based commercial banks. It is seeking these funds to develop new and more fuel efficient cars for improving its competitive position.
On the issue of loan guarantees for JLR, Tata said, “We are in discussions with the UK government on the loan guarantees and hopefully we will find a solution for it...and our funding plan for JLR will progress.”
Some 2,000 workers have lost their jobs in a tumultuous couple of years for both luxury brands, but Ratan Tata said there were no plans at present to switch production to India to reduce overheads.
“Whether we produce or assemble Jaguar or Land Rover in India will depend on the business case at that time,” he said. “I don’t think we have any plans for the present moment to do so.”
The company has refused to rule out further job losses and plant closures in the UK, where the cars are produced.
Chief executive Smith said the British workforce were “realistic” about the possibility.
“If the market dictates, future jobs and plant shutdowns cannot be ruled out” if the economic situation deteriorates, he added.
Reuters, Bloomberg and AFP contributed to this story.