JLR to get cost smart in slowing market

Jaguar Land Rover (JLR) — the two premium brands owned by Tata Motors, India’s largest automotive company — will tighten up frivolous expenditure to contain cash in a slowing automotive market.

While capital expenditure plans would remain unchanged, the addition of fresh capacity at its Halewood plant — planned to meet the robust demand for its recently launched sport utility vehicle (SUV), Evoque — may not get the go-ahead.

CEO Ralf Speth said, “We are checking our expenses. Our business plans are for the long term, and we need to make these short-term changes.”

“No one can predict a crisis or its depth; there can only be projections. But we want to save money to keep a check on development cost,” he said.

The company is running the Halewood plant through the week to cater to the demand for the Evoque. Speth said there would be some minor addition to the capacity, but by introducing more efficient manufacturing processes and de-bottlenecking of production lines.

Media reports had recently stated JLR was planning to double the size of its Halewood plant with an investment of £100 million (Rs 820 crore).

The premium car maker, which sold 1,800 units in India last year, has already announced an investment of £355 million for setting up an engine plant in Wolverhampton.

“We are close to our peak capacity at Halewood. We are even working on Saturdays and Sundays. There is a long waiting period on the Evoque model, extending to eight months. What we can do is free up some bottleneck and increase production,” said Speth.

The parent company, Tata Motors, is investing up to £1.5 billion (Rs 12,300 crore) every year in research and development programmes for the next five years. The company plans to launch 40 vehicles over five years, including a Jaguar sports car and a Land Rover Defender. It is also working on several alternative fuel technologies and reduction in CO2 programmes.

The tighter economic environment will, however, not force the company to shelve its China plans, where it is readying investments in partnership with a local company for a new assembly plant.

“Nobody can give a right indication on how the financial market will swing. Anything is possible in Europe and the US GDP growth is expected to be flat or negative. But the automotive business is cyclical in nature and we expect it to bounce back,” said Speth.