Mumbai: Dr Y.C. Reddy, 53, needed a new car. The diabetologist drives regularly to his farmhouse in Bailur from Hyderabad, where he’s based. Reddy found that his Toyota Innova wasn’t able to cope with the deteriorating road along the 100km route. Having decided to acquire a luxury sport utility vehicle with off-road capabilities, his choices were down to the Audi Q5, the BMW X3 and the Land Rover Freelander 2.
He chose the last.
A Land Rover Freelander 2 vehicle sits on display at Tata Motors’s Land Rover assembly plant in Pune. Photo: Bloomberg
“I thought this is the only vehicle that can take me there. Unlike a BMW X3 or an Audi Q5, this suits my rugged personality,” said Reddy.
Jaguar Land Rover (JLR), purchased by Tata Motors Ltd from Ford in March 2008, is hoping more people make the same choice as it aims to double India sales of all its vehicles this fiscal year after having dropped some prices. The Freelander 2 sells at about Rs 8 lakh less than comparable vehicles from Mercedes Benz, BMW and Audi, which have already established themselves in the India luxury car market. JLR is trying to catch up, having started local sales just two years ago.
“In the long run, I could see Jaguar as our biggest competitor,” Peter Honegg, managing director and chief executive, Mercedes-Benz India, had said in an interview in July, well aware of the iconic status enjoyed by JLR globally.
Sales in the India luxury car market, comprising vehicles above Rs 20 lakh, are expected to rise 35% to 23,000 units in the fiscal year from 17,000 last year, according to Debashis Mitra, director, sales and marketing at Mercedes-Benz India Pvt. Ltd, largely unaffected by slowing economic growth, higher fuel prices and rising interest rates that have hit the sales of cheaper vehicles.
JLR dealers in Mumbai, Hyderabad, Delhi and Ludhiana say sales have risen ever since the firm began local assembly of the Land Rover Freelander 2 in May last year, allowing the company to lower prices. Completely built up units or fully imported cars attract a duty of more than 100% in India.
The Audi Q5 and the BMW X3 cost Rs 42.56-43.05 lakh (ex-showroom, Mumbai) while the Free Lander 2 starts from Rs 34.69 lakh.
“Of the 20 cars we sell in a month, at least 11 to 12 units are Freelander 2s,” said a senior sales executive at one of the dealerships, who declined to be identified. Buyers, earlier restricted to celebrities and high networth individuals, now include real estate developers who use it to travel “to construction sites that have no roads,” he said.
Encouraged by the initial response, JLR plans to introduce the Range Rover Evoque and the new Jaguar XF by the end of the current calendar year, dealers said.
“India sales are expected to thrive from the price reductions managed through lowered duties after commencing its CKD (completely knocked down) assembly operations here in May,” wrote Mahantesh Sabarad and Vijay Nara, senior equity analysts at Fortune Equity Brokers Ltd in a 20 September report. “The company expects to double the number from 889 JLR vehicles sold last year.”
JLR plans to sell about 1,800 vehicles in the year through March, up from the 891 it sold last year, Dow Jones Newswires reported on 23 September, citing a person with the knowledge of the target. With 650 vehicles having sold between April and August, that target should be easy to achieve if the trend is maintained, the report said.
“Our assembly operation in Pune is one of the building blocks in realizing our ambition for the Indian market and we propose to ramp up production in line with the positive demand for the Freelander 2 in India,” said Del Sehmar, spokesman for Jaguar Land Rover India. He declined to give detailed sales figures.
The company needs to expand its focus beyond the top 10 cities and appoint more dealers in smaller towns and cities, even as the “exclusivity” factor will help JLR attract buyers, said Deepesh Rathore, managing director at market research and sales forecasting firm IHS Automotive. “They also need to have more models locally assembled.”