Pune: Jaguar Land Rover (JLR), the UK subsidiary of Tata Motors Ltd, on Friday opened its first assembly plant in India that’s expected to help it compete better in the country’s growing luxury car market.
Local assembly will help the British car maker knock off significant costs and price its vehicles competitively in India.
Imported cars attract a duty of 109% while the levy for vehicles assembled using completely knocked down kits, or CKD kits, is 30%.
“The move marks a significant step in our growth strategy for the Indian market,” said Carl Peter Forster, group managing director and chief executive at Tata Motors, which bought the British brands in June 2008.
The company did not disclose how much it invested in the plant.
The factory in Chikhali near Pune, Maharashtra, has begun assembling JLR’s Freelander, a sport utility vehicle that competes with Toyota Motor Corp.’s Land Cruiser Prado and Audi AG’s Q5. JLR has started despatching the assembled models to its dealers.
CKD kits for the Freelander are imported from JLR’s factory in Liverpool, UK.
The locally assembled Freelander 2 is priced at Rs 33.89 lakh in Mumbai, excluding registration and insurance charges, and is available in two auto-transmission variants.
The price is cheaper by Rs 3-5 lakh as the car is locally assembled, said Mohit Suri, head of Tata Motors’ premier car division.
“Had the duty on the imported CKD kits been 10%, instead of 30%, JLR could have priced the Freelander 2 more competitively,” said Hormazd Sorabjee, editor of Autocar India magazine.
Toyota’s Land Cruiser Prado, which is imported, sells for around Rs 53.28 lakh, and Audi’s Q5, which is assembled locally, costs at least Rs 39 lakh.
JLR has been encouraged by the response to its models in India, and local assembly will help sell more cars, said its chief executive Ralph Speth.
JLR’s sales in India quadrupled to 891 units in the year ended 31 March. It sells the Jaguar XJ, XF and XK as well as the Land Rover Free lander 2, Discovery 4, Range Rover Sport and Range Rover models in India through four dealerships in four large cities. It will widen its presence to 12 cities by September.
Depending on the volume expansion, more Land Rover and Jaguar models will be assembled in India, Speth said.
With average household income expected to triple in India in a few years, JLR sees tremendous potential for its models in the country, said Speth.
Luxury car sales in India expanded 40% to 18,722 units in fiscal 2010, according to a KPMG report. JLR plans to launch 40 models globally in five years.
JLR has more plans for India. The country “can be an alternative supplier not only for India but also for overseas markets”, said Speth.