Business Standard

Jaguar Land Rover marks first sales fall in 5 years

Last time the two British luxury brands posted a quarterly fall was in the July-Sept quarter in 2009-10, a little over a year after Tata Motors bought them from Ford Motor Company

Swaraj Baggonkar Mumbai
Tata Motors-owned Jaguar Land Rover (JLR) has reported its first quarterly sales fall in five years, even as concerns grow over an imminent slowing in China, the single biggest market for the two UK-based luxury brands.

From high double-digit growth in previous quarters, China, which generates a quarter of combined worldwide sales of JLR, slumped to only four per cent growth in the October-December quarter.

This, along with weak demand in other parts of the world, led to a fall of one per cent in sales. The two brands had sales of 111,185 units during October-December, as against 112,172 in the same quarter a year before.

The two brands had previously posted a quarterly fall in the July-September quarter of 2009-10, a little over a year after Tata Motors bought these from Ford Motor Company.

A JLR spokesperson agreed sales had come down in recent months but did not attribute it to the slowing in China. “Yes, our sales did come down by one per cent in December but this month should not be taken in isolation. We achieved 28 per cent growth in China in calendar year 2014 versus the same period in 2013. The luxury car market in China continues to grow and we are confident we will sustain growth for our vehicles in this market. Our manufacturing plant was opened in October 2014. By 2016, this facility will be building three models and when fully operational, will include new derivatives and models specifically designed for the Chinese market,” said the spokesperson.

Tata Motors, struggling at home, draws almost its entire profits and at least 80 per cent of total revenue from JLR. It has banked heavily on China for growth in recent years. So much so that it was cutting supplies to the US market and re-routing these to China, for better margin growth as imported vehicles in China were three to four times more expensive than in the US.

 
The North American market accounts for 17 per cent of JLR's total sales.

JLR’s rivals are also facing the heat. Ian Robertson, BMW's global sales and marketing chief, said he “expects BMW sales in China to rise at a moderate single-digitpercentage rate this year”, on the sidelines of the Detroit automobile show. Robertson said growth was shifting to smaller luxury cars from larger models.

Tata Motors also says the lower quarterly numbers are on account of product replacements and phasing out of older products such as the Land Rover Freelander. It \"is investing in 12 significant new product actions in 2015 and 50 new product actions over the next five years\", the spokesperson added.

"In China, we expect industry growth to slow to six per cent in calendar year 2015 but premium vehicles to outperform and grow at about 15 per cent. More specifically for JLR, which should be able to reduce its pricing on key products once the local JV starts and continues to expand its dealer network, volume growth should be higher than the industry's; we expect JLR's China volumes to grow by about 35 per cent in FY16,\" states a Credit Suisse report.

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First Published: Feb 05 2015 | 12:42 AM IST

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