Mumbai: Almost a year after starting local assembly of the Freelander 2, its sports utility vehicle, Tata Motors Ltd-owned Jaguar Land Rover (JLR) plans to assemble Jaguar models in the country, according to three people familiar with the company’s plans.
Not wanting to be identified, they said the British marque is set to begin local assembly of the Jaguar XF (diesel) from the beginning of next fiscal at the company’s facility in Chikhali near Pune, where Tata Motors has been assembling the Freelander 2 since May 2011.
“Jaguar has been encouraged by the response it has received so far for the entry-level model in India. It hence plans to begin assembling the car,” said one of the persons cited above. He added that despite being the most competitive car in its segment, the Jaguar XF has been “received fairly well by the Indian buyers”. Its sales, the person said, have been averaging 12-13 units per month.
At Rs 56.45 lakh (ex-showroom, Mumbai), the XF competes with the Audi A6 (Rs 47.50 lakh ex-showroom, Mumbai), BMW 5 Series (Rs 49 lakh, ex-showroom, Mumbai). The Indian government levies a duty of more than 110% on imported cars, and the duty on completely knocked down, or CKD, kits is around 30%.
JLR will import the kits from one of its UK facilities.
In an email response, a JLR India spokesman said, “JLR has said previously that we will look for opportunities to expand our Pune assembly facility. However, we have no firm plans and, therefore, do not have any product information or dates to share with you.”
Analysts, however, said that while local assembly would translate into savings for the company, it may not imply a significant price cut for buyers.
Joseph George, analyst at domestic brokerage IIFL Ltd, said, “JLR may be able to save up to Rs 10 lakh as a result of assembling the car in India.” However, the company may not pass on the entire benefit to the customers and may like to keep the gain in margins to itself. He added that a steep price cut also dilutes the brand equity, the same reason why the local arms of Honda Motor Co Ltd or Toyota Motor Corp. are not offering price cuts after starting local assembly.
The Freelander 2 competes with Toyota’s Land CruiserPrado and Audi’s Q5. After it began assembling the Freelander in Pune, Tata Motors had reduced the price of the vehicle by Rs 3-4 lakh.
Depending on the volume expansion, more Land Rover and Jaguar models will be assembled in India, Ralph Speth, chief executive at JLR had said during the inauguration of the Pune facility.
The India subsidiary of the UK-based firm plans to sell about 1,800 vehicles in the year up to March, up from the 891 last year, Dow Jones Newswires reported last year, citing a person with knowledge of the target.
JLR does not share its monthly India sales figures. India’s luxury car market, which accounts for 0.5% in the 2.5 million-unit car market, expanded 24,000 units in the year to December 2011 and is expected to expand to 35,000 units by the end of 2012, according to Puneet Gupta, principal analyst at sales forecasting and market research firm IHS Automotive.
Global luxury car makers are riding on the increasing income of the Indian households.
India has around two million households with annual income of more than $36,000, a number which is set to swell to around 8-10 million households by 2015 if the country’s economic growth stays on track, according to global research firm McKinsey and Co. Inc.