LONDON (Bloomberg) -- Tata Motors Ltd. plans to build Jaguar cars and Land Rover SUVs in China as it seeks to cut costs and expand sales of the luxury brands in emerging markets.
Tata will start Chinese manufacturing with Land Rover models and both brands would eventually produce as many as 40,000 vehicles combined, Tata CEO Carl-Peter Forster said Friday at a press conference in London, declining to specify a target date.
The company's Jaguar Land Rover division will be taking on luxury car maker such as BMW AG and Daimler AG as disposable incomes rise in China, the world's fastest-growing major economy. The country accounted for 8 percent of Jaguar Land Rover's 208,197 deliveries in the 12 months through March, according to Tata Motors' Web site.
“China is one growth market,” Forster said. “We need to grow everywhere else as well. We need to grow in China, in Europe, South Africa, South America. We have lots of growth markets.”
Tata bought Jaguar and Land Rover in 2008 from Ford Motor Co. for $2.5 billion. The Mumbai-based company, including the newly combined UK luxury car division, returned to annual profit in the last fiscal year as truck and bus sales rose in India and JLR reduced its work force and scaled back spending to achieve a pretax profit.
Targeting emerging markets
JLR is targeting growth in emerging markets by opening more showrooms in India and setting up a sales company in China, where its full-year deliveries doubled from 8,821 in a 10-month transitional period ended March 2009. Setting up production in China would require one to two years after the company made any decision on partners and a location, Forster said.
The division will decide by “mid-year” on which of two plants in England will remain open as the company consolidates production, Forster said. The factories are in Castle Bromwich, where the Jaguar XJ and XK cars are made, and Solihull, where Land Rover SUVs are built.
“One efficient operation will produce more than two small ones,” said Forster, who is a former head of General Motors Co.'s European division. “Even with closing plants, we are looking to boost volumes and employment.”