Amidst volatile economy, JLR set to start plant in Brazil

Murali Gopalan Mumbai | Updated on January 20, 2018

Ralf Speth, Chief Executive Officer, Jaguar Land Rover (file photo)

Bets big on China revival this year

As Jaguar Land Rover gears up to commission its new plant in Brazil over the next few weeks, its CEO Ralf Speth is only too aware that these are hard times for the automobile industry.

Brazil, for instance, is in the midst of a deep economic slowdown caused partially by the sharp fall in oil prices. As Speth reasons, it was one of the fastest growing economies until last year which also explained the company’s move to set up a plant here. “I cannot do much right now to make things work,” he adds good-naturedly. Speth was in India recently for the Delhi Auto Expo.

Located near Rio de Janeiro, this will be a mother plant for South America with an annual capacity of nearly 25,000 cars. Speth is hopeful there will be enough demand, even while countries like Venezuela, Ecuador and Uruguay have their backs to the wall following the sharp fall in oil prices.

The other new JLR plant planned over the next couple of years is Slovakia in central Europe.

This is a key part of the effort to go beyond the UK and get closer to customers in and around the continent. It will perhaps become even more relevant in the coming months as the countdown begins for the UK’s probable exit from the European Union.

“There is really no other choice but to go global. Europe was our biggest market last year and it makes sense to have a base in Slovakia from the viewpoint of a supplier network and so on,” says Speth.

JLR also had its share of setbacks in China last year though Speth is confident of a turnaround. “China is the biggest car market in the world and the outlook for us is positive though growth has slowed down. I am cautiously optimistic that things will look up,” he says. There were a host of issues which hit the company’s China business ranging from the Tianjin port fire which ravaged nearly 6,000 cars to supply issues with some models. Speth, however, believes that the worst is over and there is reason to feel optimistic. For the third quarter of this fiscal (October-December 2015), China numbers were down 10 per cent to 26,900 units from 29,700 recorded in the same period last year.

As a result, JLR’s market share fell to 20 per cent from 27 per cent.

China was, however, the exception in a period when all other markets showed positive growth for the company.

Sales in Europe were up 48 per cent to 31,800 cars making it the top market for JLR with North America, likewise, posting a nearly 50 per cent jump to 28,100 vehicles.

The UK saw numbers in Q3 go up 47 per cent to 25,000 units and it is now closing in on China as the third largest market for JLR with 18 per cent.

“The US is still strong, while Europe is in turmoil. I do think it will bounce back even while continental (mainland) Europe remains strong. There is no economist who can predict what will happen to the world at this point in time,” says Speth.

How about India where the owner of JLR, Tata Motors, is headquartered? In his view, the country has tremendous potential and is on its way to becoming the third largest auto producing nation in the world.

“It is our second home base,” he says, while JLR is taking one step at a time in growing its global footprint.

Even while the imminent global recession is a cause for concern, Speth says there are a whole lot of issues happening around the world where “millions are facing” huge problems.

“I hope people become more rational in trying to do their best for their countries. This will make the world a better place to live in,” he says.

Published on March 09, 2016

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