June 16, 2010 | Business Standard

Tata Motors for JLR

Excerpts:

Prepares map for more flexible, lower breakeven, self-sustaining brands.

Tata Motors has charted a multi-focal approach for reviving the fortunes of its troubled British brands, Jaguar and Land Rover.

The country's biggest automotive company has in mind a dozen-odd initiatives targeted at making the two British premium brands rediscover lost glory, including a re-entry of Jaguar into the racing arena of Le Mans.

The two brands had posted a net profit after tax of £3 million (Rs 20.5 crore) last financial year, as against a net loss of £281 million (Rs 1,900 crore) for a 10-month period during 2008-09. About half of Tata Motors' consolidated revenue is generated from JLR operations.

The initiatives include new models, engines, closer managerial and product co-operation between Tata Motors and JLR, substantial reduction in emission to meet new norms and moves into the electric vehicle and hybrid segments. There are cost management plans for components for the two brands, expansion of product development operations in India, streamlining of operations at the JLR plants in the UK and expansion in key markets like Russia and China.

Tata Motors will spend Rs 10,000-12,000 crore over the next two to three years in both research and development costs and capital expenditure for the two high-maintenance brands.

For a self-sustaining JLR
Starting this year and extending till 2012, Tata Motors aims to transform the JLR business into a simpler, more flexible and lower cost operation, with a lower breakeven point. The two brands are to be able to reinvest the cash generated, putting less pressure on Tata Motors to raise external capital. From 2014, the two brands expect to achieve self-sustainable growth, with greater synergies with Tata Motors, stated a report from the company.

New plans will also include laying greater significance on Range Rover, an upmarket sub-brand belonging to Land Rover. This will allow the luxury brand, also the most expensive in the Land Rover line, to promote an all-new, mid-size Range Rover that will come between the LRX and the Range Rover Sport.

The LRX concept will be a production-ready model next year, to eventually make its way to India. The LRX will be the cheapest Land Rover model ever built and will compete with the likes of BMW X1, which BMW intends to launch in India by the year end, in the price band of Rs 25 lakh.

Group CEO confirmed the management was exploring market space for a small Jaguar saloon, while working on a new XK roadster. In addition a new XE sports car, built on aluminium platform technology, which could perhaps be a small two-door coupe, is also being worked upon.

China hopes
JLR had opened purchasing offices in India and China last year for vehicle components. The company intends to continue and increase the content of strategic low-cost sourcing of materials and parts from these to nations, the statement further acknowledged.

China, especially, will hold a greater importance for the two brands, as it has been the fastest growing market for JLR in the world. Its share last year doubled to more than 8.8 per cent, while its sales are pegged to grow by nearly 50 per cent this year.

Looking at the impressive demand for the JLR brands especially for Land Rover, Tata Motors plans to establish a national sales company in China this year, in addition to setting up an assembly unit at Nanchang in Jiangxi province in the near term.