Jaguar Land Rover forced to slash prices in China

This is expected to negatively impact margins of the two brands, estimate analysts

Jaguar Land Rover has agreed to lower prices of three of its car models in China by five-seven per cent after being told it was overcharging.

Prices of the Range Rover V8, Range Rover Sports V8 and Jaguar F-Type will be reduced by an average of 200,000 yuan (Rs 20.4 lakh) from August 1. Every fourth car made by Jaguar Land Rover is sold in China.

Over several months the Chinese media has been alleging multinational car makers like Mercedes-Benz and Jaguar Land Rover are overcharging consumers.  Premium car prices in China are up to four times higher than elsewhere in the world, claim reports. Jaguar Land Rover, for instance, sells the Range Rover for 1.89 million yuan in China and for 540,000 yuan in the US.

According to the state-run Economic Information Daily, China’s Price Supervision and Anti-Monopoly Bureau summoned executives of a few foreign car makers earlier this month to Beijing.

“This price adjustment is expected to help strengthen our competitiveness and increase market share in China’s premium automobile market,” said a spokesman for Jaguar Land Rover India who did not wish to be named. “We continue to have a long-term commitment to China and expect the market to continue growing,” the spokesman added.

The Tata Motors stock closed 4.88 per cent lower at Rs 461.90 on the Bombay Stock Exchange on Friday. Tata Motors owns Jaguar Land Rover.

“This can happen in the future as well since profits per vehicle in China are almost three times the average for the rest of the world," a Credit Suisse report said.

Jaguar Land Rover’s sales growth in China is far higher than its average international growth. In the three months ended June 30, sales grew 61 per cent to 32,912 from the same period in the prior year. Nearly 82 per cent of the sales came from Land Rover.
TIME FOR A PRICE CUT

• Prices of the Range Rover V8, Range Rover Sports V8 and Jaguar F-Type will be reduced by an average of 200,000 yuan (Rs 20.4 lakh) from August 1
• Jaguar Land Rover’s sales growth in China is far higher than its average international growth