New models and growth in emerging markets to boost JLR sales

New models and growth in emerging markets to boost JLR sales

Mumbai: Jaguar Land Rover (JLR), the UK subsidiary of Tata Motors Ltd, expects new model launches and brisk growth in luxury car markets in emerging markets such as China and Russia to compensate for the decline in sales in UK and Europe, said Kenneth Gregor, chief financial officer.

Tata Motors acquired JLR from Ford Motor Co. in June 2008.

Gregor said in a conference call with analysts on Thursday that JLR has received close to 18,000 bookings for the Range Rover Evoque, which goes on sale in September in the UK. The new Jaguar XF, also being launched in the same month, will boost sales as well, he added. The margin contribution from the Evoque is expected to be better than the Free Lander but less than the Range Rover and Range Rover Sport, he added. The company plans to hire 2,000 temporary employees to help in production of the Evoque.

Adverse foreign exchange and Evoque related costs would impact JLR’s first-quarter earnings, eroding margins by 160 basis points to 13.4% over last year, Emkay Research analyst Chirag Shah wrote in a 29 July report. One basis point is one hundredth of a percentage point.

JLR benefited from favourable foreign exchange changes to the tune of GBP 200 million in fiscal 2011.

In the three months to June, JLR’s sales in China expanded 36% to 9,900 units from 6,300 units a year ago. Encouraged by the response, JLR plans to double its outlets from 50 to 100 in China by the end of 2011. Sales in Russia went up to 3,600 units from 2,300 units in the same period last year.

“The growth in Chinese luxury market will continue for JLR and rest in the current year, but they need to brace themselves for the next year, as we expect moderation in demand," said Ashvin Chotai, London-based auto analyst. “They cannot continue to grow at the same pace."

During the quarter, Jaguar’s sales fell 10% to 12,600 units while that of Land Rover went up 12% to 50,700 units, against the same period a year ago. Jaguar sales, Gregor said, were dragged down by twin factors – economic weakness in the UK and Europe and the phase-out of the XF ahead of the new model. He expects Jaguar sales to pick up as the new model reaches dealers next month.