Tata Motors-owned Jaguar Land Rover is committing fresh money into the parent company’s home market by investing in an engine assembly and manufacturing line at the Pune plant, as it seeks to carve a meaningful place for itself in the Indian luxury-car space.
An also-ran in the Indian market for long, JLR broke into double digits in market share for the first time last financial year, thanks to a price correction. The additional investment in the local market will help it compete strongly against German rivals — Mercedes-Benz, BMW and Audi.
While an investor presentation made by the company talked about the India engine facility, it didn’t provide details like the timeline or the investment the project would require. Import duty on luxury cars vary depending on how they are brought to the country: as knocked-down parts or completely built units. Based on the level of local assembly, it can be 17%, 33% or 70-110%, with completely built imports facing the highest rate.
Through investment in a local engine assembly line, Jaguar Land Rover India will defeat the high duty structure for fully built imported engines and help save the company at least 20-25% on the final price of vehicles. The company will be manufacturing the Ingenium series of engines for the domestic market.
People in the know say it is likely to be a 2-litre diesel engine, which is predominantly used in its current portfolio. JLR chief executive Ralf Speth told ET in a recent interview that India had made huge progress in recent times and that instead of the automaker pushing its weight in India, he would like to see the market pushing the company to be part of the growth. “Every six months we look at India and say, there must be a breakthrough around the corner — it must come. Whenever we have critical mass of volume, we will also expand our footprint in India. We produce already today, we are also looking at assembly of engine, we are assembling more models today and will look at expanding further,” Speth had said.
The Indian luxury-car market posted sales of more than 40,000 units in fiscal 2018, registering double-digit growth over the previous year. JLR India grew much faster than the market and the price correction in the last fiscal year provided a major boost to sales.
JLR ended financial year 2017-18 with 83% growth, selling 4,609 units. The company credited the strong performance to the sustained product launch action through the year with an expanding retail network. It has already announced plans for 10 new product launches during FY19, which will help the company sustain the growth momentum.
Source: Economic Times