Jaguar Land Rover may begin to manufacture cars in India, a report from the Wall Street Journal said, citing an unnamed inside source. The move would lower the price for JLR vehicle's in the world's second-most populated country.
The process is in a "very preliminary stage" the person said. However the move would be in line with the automaker's increasing desire to set up manufacturing operations in emerging economies.
"Like Brazil, India is one of the possibilities for Jaguar Land Rover to fully manufacture cars," the source said. The report indicated auto industry analysts are skeptical about the viability of a full-fledged JLR manufacturing plant in India.
Currently two JLR vehicles are assembled in India, using kits, engines and gearboxes imported from the United Kingdom, the report said. Completely manufacturing the cars in India would save the company money on government taxes as well as reducing labor costs.
Taxes on imported cars recently rose to 100 percent from 75 percent, the Journal reported. JLR vehicles assembled using imported parts are subject to a 30 percent tax, while vehicles with locally made parts have a 10 percent tax.
The assembly plant, in west India, puts together the Jaguar XF and the Land Rover Freelander SUV at the same facility where parent company Tata Motors builds cars and trucks.
Rival automakers would fall behind in the Indian market if JLR builds a full manufacturing plant there. Daimler, Audi and BMW have assembly plants in the subcontinent, but nothing more sophisticated, the report stated.
However, industry analysts say JLR would not sell enough cars in India to justify building an operating plant.
"A manufacturing facility would entail an investment of about 25 billion rupees ($455 million), in which case, the company would need to sell about 12,000 vehicles to make a profit...JLR does much less," said Mahantesh Sabarad, an analyst with Fortune Equity Brokers (Pvt) Ltd., according to the report.
Tata Motors purchased the Jaguar and Land Rover brand names for $2.3 billion from Ford Motor Co. in 2008, the report stated. The JLR unit is Tata's biggest source of revenue and profit.
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