Jaguar Land Rover production capacity will hit 7 lakh units by FY 2017, analysts say

 

CHENNAI: Jaguar Land Rover will scale up its production capacity to hit 700,000 units by financial year 2017 riding on its joint ventures in China and Brazil, say analysts.

JLR's capacity for the current year is pegged at 450,000 units, with Jaguar's capacity at 85,000 and Land Rover's capacity at 350,000 -370,000 units.

The company's Solihull plant in the UK has a capacity of 200,000 units which mainly produces the Range Rover (RR), RR Sport, Discovery and Defender.Currently, JLR is "facing supply constraint in Discovery, thereby, leading to muted sales for the same," said Surjit Arora, analyst with Mumbai-based equity research firm Prabhudas Lilladher. "Capacity constraint would be sorted out only by the second half of FY15 where the small Jaguar or Baby Jag would be produced on the all-new aluminium architecture. At the same time, with some de-bottlenecking, the capacity could be augmented by 30,000-40,000 units. By end FY15, the overall capacity at JLR is pegged to be around 5,00,000 units," he added.

JLR's China JV with Chery Automobile would commence operations in FY16. "The total capacity over the next three years at the JV level is pegged at 110,000-130,000 units," said the report by Prabhudas Lilladher.

"As import duty in China is currently pegged at 30-50%, setting up a plant in China would lead to savings, which according to the company, would lead to lower prices for its vehicles (est. at 15%). The company would assemble Freelander and Evoque in China, whereas, RR and RR Sport (premium products) would continue to be produced in UK facilities," said Arora.

Currently, JLR has 10 product offerings based on six platforms which would be increased to 15-16 products based on four platforms, said the report. "Majority of the new products are likely to be launched on the lower end of the premium segment, thereby filling the gap vis-a-vis competition," said Arora.

 

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