Credit Suisse: China JLR sales surge to boost Tata Motors
Credit Suisse has maintained its "outperform" rating on Tata Motors, saying its luxury brand Land Rover continues to grow ahead of competition in China, one of its biggest market, even as the overall luxury car demand there has slowed down a bit.
April 26, 2013 / 08:48 IST
Moneycontrol Bureau
Credit Suisse has maintained its "outperform" rating on Tata Motors, saying its luxury brand Land Rover continues to grow ahead of competition in China, one of its biggest market, even as the overall luxury car demand there has slowed down a bit."Management target is to grow volumes from 77k in FY13 to 95k in FY14; however, dealers believe 100k is easy, and if more supply is made available, even 110k is possible," analysts Jatin Chawla and Akshay Saxena said.High demand for luxury vehicles from increasingly affluent Chinese has led to strong sales for companies like Audi, Mercedes, BMW and JLR.Jaguar Land Rover now accounts for over 90 percent of Tata Motors' consolidated earnings. It sold 77,000 units in China last year, and is expected to race ahead of Europe (excluding UK) and become its largest market.In order to cash in on the strong demand in China, JLR last year struck a deal with local car maker Chery Automobile Co to manufacture vehicles there. It is also expanding its dealer network to 200 from 100 last year.After a surge in 2012, growth in tier I cities in China is now flat for most luxury brands, but JLR demand remains strong since Land Rover is considered must have brand in a wealthy Chinese's car portfolio, the analysts said. "JLR should have 30 percent growth in FY14, will continue growing faster than market as LR brand has no competition."Chawla and Saxena further point out that the new Range Rover has received a tremendous response in China and consumers are prepared to pay 10-15 percent premium for early delivery and even the outgoing Range Rover Sport has no discounts yet.Land Rover Freelander and Range Rover Evoque account for half of JLR's China volumes, followed by Range Rover Sport and Discovery models.While Land Rover sales continue to accelerate, Jaguar has not had much success there, despite zero percent finance schemes, the analysts note, adding a lot rests on the new F-type to revive the Jaguar brand there. Tata Motors shares were up 3.8 percent at Rs 292.20 on NSE in afternoon trade. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
