Jaguar Land Rover sees first sales drop since its India entry
Lack of cheaper models affecting JLR, say analysts, as rivals such as Audi plan local assembly, dealership expansion
Sales of the local arm of the British luxury marque contracted 7.3% to 2,700 units in 2014. The maker of the Jaguar XF sedan and the Range Rover Evoque sport utility vehicle dispatched 2,913 units to its dealers in India in 2013, according to IHS, a sales forecasting and market research firm.
JLR dealers in India attribute the slowdown to the gradual ramp-up in production of the Range Rover Evoque at the company’s local assembly unit near Pune and the discontinuation of the Land Rover Freelander 2.
In line with its global plans, JLR in India has phased out the Freelander 2 to make way for the Discovery Sport, which is expected to be launched later this year.
The numbers put out by JLR—of retail sales in India—are at variance with those quoted above. But they too show a drop of 1.6% to 2,846 units in 2014, from 2,891 in 2013.
The decline, the first since the firm’s entry into India, came on the back of a sluggish luxury car market, said Rohit Suri, president, Jaguar Land Rover India, in an interview on 15 June.
But Suri is not worried. “Our sales in India have increased 15 times in five years,” he said, adding that JLR has managed to expand year-on-year despite being present in only half the addressable market.
“If we had smaller cars, we would have literally smothered rivals,” he said.
The entry-level price point for JLR models in India is Rs.50 lakh, while that of German rivals such as Audi, Mercedes-Benz and BMW is Rs.25 lakh. Suri is confident this will change once the company introduces the Jagaur XE in India next year.
The Jaguar XE, to be priced at around Rs.38-40 lakh, will be pitted against the BMW 3-Series and Mercedes C-Class cars.
For now, JLR, a late entrant to India’s small but fast-expanding luxury segment, which accounts for less than 2% of the overall car market, is clearly lagging its rivals.
Significantly, its sales in India declined in a year when most other manufacturers saw sales advance, albeit at a slower pace compared to last year.
Market leader Audi India, for instance, sold 10,581 units, up 8.7%; Mercedes India dispatched 10,201 units—11% more than what it sold a year ago. BMW doesn’t report sales numbers.
Both Audi and Mercedes have outlined aggressive model launches, local assembly and dealership expansion plans to tap into a market which is estimated to expand 20% in the current calendar year against last year, when it was almost flat with sales of 33,000 units.
Analysts agree that the absence of cheaper models has been a handicap for JLR in India and elsewhere. “One of the biggest challenges for JLR has been the absence of a model at the entry level of the market,” said Puneet Gupta, principal analyst at IHS, adding that over the next few years, introduction of models such as the XE and the Discovery Sport should boost their market share in India too.
However, “it will take them a while to be on a par with German rivals in terms of volumes”.
Further, an intense focus on China, one of JLR’s biggest markets, is another reason for the company not being as aggressive in India as Audi and Mercedes on new rollouts and local assembly, said an analyst at a consulting firm, declining to be identified.
Suri of JLR dismisses the argument. “The management is very serious about the Indian market,” he said, adding that the commencement of local assembly of most key models is an indicator of JLR’s seriousness.
Meanwhile, JLR dealers blamed the discontinuation of the Freelander 2 last year for the sluggishness.
“It was priced attractively and was turning in brisk volumes,” said a dealer who did not want to be named.
The impact of the local assembly of the Range Rover Evoque on overall volumes is yet to kick in as the ramp-up is slow, he added.
JLR began local assembly of the model in March and reduced prices by Rs.1.5-2 lakh.
“When the model was being imported directly, deliveries to customers were much faster,” said another dealer, declining to be identified.
JLR’s Suri attributed the delay to demand outstripping supply by a wide margin. “The demand is at least 30% higher than what we expected. Hence the delay,” he said.
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