Tata Motors owned Jaguar-Land Rover is said to be contemplating full production in India. Talk about JLR considering grounds up production of select cars in India has been making the rounds for quite a while now and this latest story comes at a time when both Jaguar as well as Land Rover have registered big year-on-year sales growth. Currently, JLR operates out of Tata Motors Chikli factory, an assembly facility that was previously used to assemble Mercedes Benz cars by the Tata-Mercedes Benz alliance. While Jaguar assembles the XF 2.2 and XF 3.0 turbo diesel engined luxury sedans at Chikli, Land Rover assembles the Freelander2 SUV.
The rest of the cars in JLR’s range are imported into India through the completely built(CBU) route. Now that the 2013 Union Budget has hiked import duty on CBU cars from 75% to 100%, it makes a lot of sense for JLR to assemble more cars through the CKD route of even for that matter kickstart grounds up production of select car models in its range that are top sellers. Jaguar-Land Rover has been working with Indian vendors and parts suppliers for local sourcing of certain parts used in JLR cars. The idea behind local sourcing is to drive down the cost of Jaguar cars and Land Rover SUVs, making them more competitive against the likes of competition which includes Volvo, Audi, Mercedes Benz and BMW.
Full production of Jaguar cars and Land Rover SUVs will mean that JLR will have to establish many more parts supply sources in India. This, as local production without adequate local sourcing is essentially an opportunity lost as the high import duty on import parts will negate much of the duty advantage that can be gained through local production. With local sourcing emerging as an important area of focus for local production, Tata Motors’ expertise on this front will be key to JLR as Tata Motors has a well established vendor network in India.
In other news, the CKD assembly of the Range Rover Evoque Crossover could begin soon in India. Currently, the crossover is a CBU import and this has resulted in the Evoque’s steep pricing. At the Evoque’s launch in India a couple of years ago, JLR did announce that the Evoque would eventually be assembled in India. This plans seems to be gaining momentum although JLR has been tight lipped about the Evoque’s local assembly. If the Evoque does jump onto the CKD bandwagon, expect the crossover’s price to be drop by over 15 lakh rupees.