Jaguar Land Rover ups the ante in India

Jaguar Land Rover (JLR) sold around 1,800 cars in India in 2011. This represents a massive 160 percent growth, the bulk of which has come from Jaguar, which has grown faster than Land Rover.

The best-seller is the Jaguar XF, which is giving its German rivals a hard time in certain sectors of the Indian market. No doubt JLR’s exponential growth is off a small base and it still lags behind Mercedes, BMW and Audi, which sold 7,430, 9,371 and 5,511 cars respectively in 2011, but given the smaller dealer network, it is an impressive figure.

JLR has only 13 dealers nationwide compared to the 37-strong network of Mercedes. However, JLR has aggressive plans to increase its dealer base, which is key to the company’s growth in India.

JLR will also exploit its synergies with Tata Motors and this means further utilisation of Tata’s facilities for local assembly. The Land Rover Freelander 2 is currently the only model in the JLR range that’s assembled locally, but it still attracts a 30 percent customs duty. JLR plans to increase localisation to qualify for the lower 10 percent duty rate.

With almost the entire range fully imported, JLR has higher costs than its rivals, which puts it at a disadvantage. “We understand the cost benefits of local assembly and will, step-by-step, move in that direction,” says Ralph Speth, CEO. But he also adds, “Though we are prepared from our side to assemble more vehicles, we have to see what the market and economy is doing in order to achieve a critical volume to justify CKD assembly.”

The Range Rover Evoque and Jaguar XF are likely to be locally assembled in the future and a longer-term plan to share powertrains between Tata and JLR for huge cost benefits is also on the cards. “We are developing a 2.0-litre, four-cylinder engine which can be modularised into lower displacements so we don’t have to invest further in the overall tooling and facilities. With lower-displacement engines, there are obviously opportunities to share them within the Tata community.”

Unlike Volvo, which is not on luxury car buyers’ radars, JLR has been able to quickly establish itself as a strong player at the upper end of the market. The company is confident of challenging its German rivals and, with the backing of Bombay House, we wouldn’t bet against it.

PLATFORM SHARING GAMEPLAN

Tata Motors Chairman Ratan Tata has confirmed a burgeoning, under-the-skin relationship between Land Rover and Tata’s own models. “We are looking at producing the platform for the new Defender in India,” he says, “then modifying it so it can be shared with a Tata product.”

The next-gen Defender, Tata Aria and Safari, likely recipients of the new platform, are all body-on-frame designs. There’s even a possibility that Defenders could be made in India, and sent back to the UK under a kind of 'reverse CKD' process where the ladder frame, which is labour-intensive to build (and hence cheaper in India), is shipped to the UK for final assembly. This idea though is still under evaluation.

Does Tata see a danger in sharing parts between cars of differing images and prices? “Not really,” he says, “though we shouldn’t make it obvious, which I think is what Ford did. If Tata Motors was able to use parts designed specifically for a JLR model, I believe that would be okay. But I think there would be an obvious danger in having a Tata part showing up in a Jaguar.”

STEVE CROPLEY & HORMAZD SORABJEE