India will get fresh investments and added product lines from Tata Motors-owned British brands Jaguar Land Rover even as the company has not lined up big-ticket investments for elsewhere across the globe.
C Ramakrishnan, Group Chief Financial Officer, Tata Motors
, said, “There will be some expansion of facilities here in India, where more product lines are getting added but beyond that in the immediate future or a short-term future we are not looking at any major investments of this nature”.
JLR is adding capacity at the assembly plant in Pune where it presently makes five models – Jaguar XE, XF and XJ and Land Rover Discovery Sport and Range Rover Evoque – with the help of knocked down kits imported from JLR’s mother plant in the UK.
The move towards making fresh investment at the Pimpri plant in Pune highlights the need for JLR to have more localised products in order to be more cost competitive in the face of increased competition from rivals.
Luxury car market leader Mercedes-Benz followed by Audi and BMW, all of whom have products that compete against models of JLR, have rapidly added new products to their local plant in India, thus making them substantially cheaper. Prices have dipped by Rs 1-8 lakh after localization depending on the model.
German heavyweights Mercedes-Benz and BMW have even gone to the extent of buying engines locally from an Indian manufacturer to further cut costs. A relatively unknown Indian auto company Force Motors
, which is into the manufacture of mini buses and small tractors, does assembly operations for the two luxury car makers.
"Right now we are sourcing globally but moving forward we are focused on increasing the local content in our cars in India. We can certainly do more of localisation that will help us reduce overall cost," said Rohit Suri, president, JLR India has said in an earlier interview.
Luxury carmakers are no longer shying from buying local car parts, too. For example, BMW has localisation content of 50 percent for most models, compared with 20-30 percent a few years ago.
Among the components that the German giant sources from Indian vendors are engines, transmissions, axles, exhaust system and air-conditioning. Mercedes-Benz, a leader in luxury car segment, is a step ahead with localisation content of 60 percent, higher than some of the mass market brands.
"We had a 9 percent market share in the premium segment. With the launch of models like XF and others, this share has gone up higher. Last year we launched the Land Rover Discovery Sport and Jaguar XE," Suri added.
Mercedes-Benz, BMW and Audi together have at least 23 models which are assembled in India, ranging from Rs 35 lakh and Rs 1.5 crore. All the three companies are exploring options to add more models to their assembly operations in India.