Saturday, August 13, 2011

As Nano Sales Fall, Tata Motors Invests on Jaguar and Land Rover to Raise Profits

When Tata Motors bought Jaguar and Land Rover from Ford in 2008, it had great plans for both brands. Driven by sales of the sub-$5,000 Nano, the Indian conglomerate would have enough funds to secure their future. Now it seems that the tables have turned, and it's the Jaguar Land Rover (JLR) unit that may have to bring in the profits.

Tata Motors reported an 8.5% drop in sales in India for the first quarter of 2011, due to rising interest rates in a country where, according to Bloomberg, 80% of new car sales are based on loans.

Demand for the Nano dropped by a whopping 48% in the last two months alone. Jaguar's global sales dropped even more in the first quarter, as the luxury carmaker reported a 27% decrease.

“Tata Motors had a pretty flat quarter as far as Jaguar sales are concerned, and Indian passenger vehicles sales went down” said Juergen Maier, a manager at Raiffeisen Capital Management in Vienna.

“Everyone is looking at the Evoque and also the product launches from Jaguar that will help increase sales”. Ashvin Chotai, the managing director of Intelligence Automotive Asia, agrees: “The company now revolves around the JLR unit and not the other way around”.

Fortunately for Tata, Land Rover is doing quite well: its sales in the past quarter grew by 22% to 50,747 units. And the Range Rover Evoque has already 18,000 orders even before it officially goes on sale in September, something that according to the brand’s director, John Edwards, will create a waiting list “well into next year” for new buyers.

Tata also has in the pipeline several Jaguar products including a Sport Break version of the XF and the exotic 200 mph C-X75 hybrid supercar. More importantly, Jaguar will launch a small sedan to rival luxury models like BMW’s 3-Series (hopefully with better results than the X-type).

In order to achieve its goals, the Tata Group plans to invest $2.4 billion annually in the development of 40 new products and variations of Jaguar and Land Rover models in the next five years.

Story source: Bloomberg



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