Last month, Tata Motors Limited announced that it will begin building its luxury Land Rover and Jaguar brands in China in an effort to reduce costs and increase its share of the premium auto market.
Tata CEO, and former head of General Motors Company’s European division, Carl-Peter Forster, said the Indian automaker will begin manufacturing its Land Rover SUV models in China. China production of its Jaguar brand will follow, and Tata estimates total combined production for both brands may reach 40,000 units annually. Tata has not said how soon the new China-based production will begin.
In China, Tata’s Land Rover and Jaguar brands will face some stiff competition from other foreign luxury carmakers including Daimler AG and BMW AG. The increase in disposable incomes of Chinese consumers has made China the world’s fastest-growing economy and has created something of a gold rush mentality among foreign automakers as many other markets struggle to rebound from last year’s economic meltdown.
In the 12-month period ending last March, China accounted for 208,197, or 8% of all Jaguar and Land Rover sales. Forster said China is only one component of Tata’s expansion strategy. He said, “China is one growth market. We need to grow everywhere else as well. We need to grow in China, in Europe, South Africa, and South America. We have lots of growth markets.”
In 2008, Tata bought Land Rover and Jaguar from Ford Motor Company for a reported $2.5 billion. During its last fiscal year, Tata reported annual profits as its commercial truck and bus sales rose in India. The Jaguar Land Rover (JLR) division also cut its workforce and reduced spending, which led to a pretax profit.
JLR is opening additional dealerships in India and plans to set up a sales division in China. Forster said that once a decision has been made concerning the location and any partnerships, it could be an additional one to two years before the company actually begins making Land Rovers and Jaguars in China.
JLR also plans to close down one of its two production plants in England to help facilitate the opening of the new China plant. JLR will decide by “mid-year” whether to close its Castle Bromwich plant, which makes the Jaguar XJ and XK models, or its Solihull facilities, which manufactures the Land Rover SUV.
Forster said, “One efficient operation will produce more than two small ones. Even with closing plants, we are looking to boost volumes and employment.”
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