First Land Rover rolls out of Indian factory

May 27, 2011

, PIMPRI, May 27 – Mumbai-based Tata Motors opened its first Indian factory on Friday for Land Rovers, the formerly loss-making British brand aiming to make inroads in the booming South Asian market.

A Freelander 2 sports utility vehicle was the first to roll out of the plant on the outskirts of Pune, some 100 kilometres (60 miles) from India\’s financial capital Mumbai.

Production of Jaguars — the Land Rover stablemate bought in the same 2.3-billion-dollar deal between Tata and Ford in 2008 — is expected to begin at the plant at a later date.

Auto sector analysts say the move will help Jaguar and Land Rover lower costs and become more competitive in India — the world\’s fastest-growing major car market — where rivals BMW, Daimler and Audi are already well-established.

Tata announced bumper profits of 92.7 billion rupees ($2.04 billion) on Thursday, of which the vast majority — 1.7 billion dollars — came from the Jaguar Land Rover (JLR) unit.

"We are very optimistic about Jaguar Land Rover in terms of volume growth," JLR\’s chief executive Ralf Speth told a news conference in Mumbai after reporting a 25-percent rise in annual unit sales to 243,621.

Ford offloaded Jaguar Land Rover as part of its restructuring efforts after losing $15 billion in two years. In 2007, the British unit sold just 65,500 cars.

While it is now booming under Indian ownership, the new facility raises questions about production at its three plants in Britain where Tata Group chairman Ratan Tata was recently embroiled in a row about the work ethic of local managers.

He told The Times newspaper that "nobody is willing to go the extra mile" at the company or British steel maker Corus, acquired by Tata in 2006.

The company later said he was talking about former managers and was not suggesting they were lazy.

Tata Motors sells Jaguar XJ, XF and XK sedans in India in addition to the Discovery and Range Rover SUVs from Land Rover, which are currently imported as complete units and marketed through a network of local showrooms.

Tata Motors chief executive Carl-Peter Forster has said that India is a "huge market with immense potential" and sees it with China, where demand for Jaguar and Land Rovers rocketed last year, as a key target for growth.

JLR is beginning to customise its cars to meet Indian needs, Indian spokesman Del Sehmar told AFP, offering more space and rear-seat comfort because most luxury cars in India are chauffeur-driven.

Sehmar said the company sees India as a "second home market" after Britain, with a rosy future.

Industry analysts say that local assembly plants will help Jaguar and Land Rover lower their retail prices by avoiding heavy import tariffs imposed on foreign cars shipped to India.

BMWs, Mercedes and Audi are still more commonly seen in Indian cities than Jaguars or Land Rovers and the companies already have assembly plants in the country.

On Thursday, Forster indicated that India could also become an option for making engines in the future.

Mahantesh Sabarad, from Fortune Equity Brokers in Mumbai, said that Jaguar Land Rover still has work to do to implant itself in the mind of the Indian consumer, despite improved sales.

"The company has to make its cars more attractive, not by dropping prices but boosting appeal and value through better branding and improved features," he told AFP.

India has emerged as a popular destination for foreign auto makers, as growth in Western markets has dwindled.

Domestic car sales in India grew by 30 percent to 1.98 million units in the last financial year — the most in more than a decade — as an increasingly affluent middle class snapped up new models with the help of cheap loans.

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