Jaguar Land Rover Indian expansion

Sales for 2011 were up a staggering 164% on 2010. Even though this brings sales to a fairly small total of 1,800 vehicles for the year, Jaguar Land Rover India are still delighted with the increase.

It’s been achieved even though Jaguar Land Rover started with a very low base, and against much more established competition.

Plus neither brand have a car that is similar in size to the incredibly popular BMW 3 Series or Mercedes C Class, which together make up 40 to 50% of luxury sales in India.

So is a smaller Jaguar in the works?

This is the question many in the automotive trade are asking. With the premium segment predicted to grow worldwide by 43%, from 28 to 40 million and with the most growth in the sub £30,000 vehicles, it seems that Jaguar could be missing a vital trick, particularly in the emerging markets.

Jaguar are remaining tight-lipped about the possibility, conceding that the change to smaller cars, requiring higher volume of production and sales to compensate for lower costs would be a “huge investment” for the company.

But, really, is it an investment Jaguar can afford not to make?

Even they concede that it would be a “great idea to be in this market”. It might turn out to be a necessity if they want to compete with India’s top foreign manufacturers: BMW, Mercedes and Audi.

At the moment Jaguar Land Rover are relying on the high perceived status of their cars, believing that Indian customers purchase a Land Rover Discovery or Land Rover Freelander because of the luxury association with the vehicle rather than a desire for off-road capabilities.

The Indian launch of the Range Rover Evoque is further expected to boost the company’s fortunes in its parent company’s home turf.

International expansion could be good news for the UK

Jaguar Land Rover’s enigmatic response to developing a car capable of competing in the small luxury car segment is expansive compared to their ‘no comment’ on rumoured plans to expand their Merseyside plant.

There are whispers of growth that would create 1,500 new jobs at the factory, indicating how the growth of India’s middle class economy could benefit UK jobs.

Tata to launch Nano in the West

Meanwhile Tata is looking to expand its range of cars westwards, introducing the budget Tata Nano into Europe and the US.

However, there is a measure of cynicism from commentators as to whether this bargain Indian car will ever gain popularity in the west.

The production of the Tata Nano has been beset with numerous production problems and safety concerns, which although Tata says are being ironed out, may have terminally damaged the car’s reputation.

Not to mention the fact that the Nano has failed to live up to its pre-launch hype in India, getting a rather cool reception from buyers.

This might be due to India’s rapidly expanding middle-class leapfrogging directly into the booming luxury segment, perhaps making it even more imperative for Jaguar Land Rover to gain a strong toe-hold in the market.

Tata admits work needs to be done

Tata do admit that considerable work would need to be done before the Nano could be released in the west.

They particularly highlight the need to adapt the car to meet expectations of comfort and driveability, although given the shifting demographics of the Indian market, such improvements might go down well with its home audience too.

In addition, Tata would need to investigate and develop logistics in the west, as well as establishing dealerships.

Image a problem?

Tata believe that one of the main problems hampering the growth of the Nano is its image as a ‘poor man’s car’, devaluing it in the eyes of status conscious customers.

Certainly an image overhaul seems necessary before launching in Europe and the States, and to ensure increased market share in India.

Tata boss Ratan Tata was also keen to rectify a gaffe made last year, where his comments were seen to be critical of UK engineers and managers at Jaguar Land Rover.

Now he emphasizes that he was just discussing the very different corporate culture between the two countries, where having to respond to continual crisis mean that Indian executives need to work much longer hours.

This could be seen as a first step to making the British market more receptive to the Indian brand.

So where do Tata and Jaguar Land Rover go from here?

We’re going to be watching both companies carefully. Whether its new Jaguar’s being designed for the Indian market or the Tata Nano getting a facelift to compete in the UK, its seems likely that developments here could have real implications for British drivers and the automotive trade as a whole.

What about you? Do you think that it’s worth the risk for Jaguar to develop a smaller saloon?

And how do you rate the chances of the Tata Nano establishing itself in the UK?

Post your comments below.

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Andrew Kirkley
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  • 9th January 2012

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