Tatas may look at US for new JLR factory

This, as company is fast exhausting production capacity at its other plants

Confident of a high sustained demand for the Jaguar Land Rover range, India’s biggest vehicle manufacturing company Tata Motors may look at building a facility in the US.

 

The company, which is fast exhausting production capacity at its UK plants thanks to robust demand for almost all its products, is forced to debottleneck production lines to extract additional output.

 

Over the last several months Jaguar and Land Rover had to overlook the US market and reroute its supplies to China where products fetch more than twice the price charged in the US. China thus became the margin growth driver for the two luxury brands. 

 

Lower supplies to the US is despite the fact that the country remains one of the top three markets for JLR where demand still remains healthy. Last year volumes in the US were at 75,671 units.

 

To make additional room for production, JLR is set to bring on stream a new factory in China in the next three months. With new models including high volume compact range slated to join production, JLR will need additional capacity to match demand.

 

Kenneth Gregor, chief financial officer, Jaguar Land Rover, said, “The US is a market for premium cars and a very important market. We are exploring our options to expand manufacturing reach globally and yes US could be one of the markets. We would look at it but that is not to say that we have anything concrete to announce”.

 

JLR’s present capacity in the UK is between 450,000-500,000. The China JV will add 130,000 units a year while a small facility in Brazil will have a capacity of 24,000 units a year. JLR also has small assembly operations in India and plans to set up a new facility in Saudi Arabia.

 

Last financial year, the company saw sales rise by 16% to 434,311 units as against 374,636 units sold in 2012-13. The company is targeting to have a worldwide capacity of around 700,000 units a year in the next 3-4 years.

 

Due to rerouting of supplies to China, Jaguar Land Rover volumes growth in the US slumped to 41,319 units during this year so far, which was unchanged when compared to the same period last year.

 

Comparatively China sales grew by 35% in the April-October period to 70,161 units as against 52,021 units. China now commands a share of 27% while North America’s share has declined to 15.9% this year as compared to 18.1% last year.

 

US sales in October slumped to 4,650 units, a 20% decrease from 5,801 units sold in the same month last year. JLR has 330 independent retail outlets in the US. In comparison, BMW clocked a growth of 11% while Audi grew by 17% during the same month.