Jaguar Land Rover Plans $392 Million Car Plant in Brazil

Jaguar Land Rover, the luxury-vehicle division of India’s Tata Motors Ltd. (TTMT), signed an agreement to build a 240 million-pound ($392 million) factory in Brazil with capacity to produce as many as 24,000 cars a year.

Construction of the plant in Itatiaia, in the state of Rio de Janeiro, will begin in mid-2014, the Gaydon, England-based division said today in a statement. The first cars will roll off the production line in 2016, subject to final approval of the plans by the Brazilian federal government.

Lured by the prospect of Brazilian luxury-auto sales tripling by 2017, Jaguar Land Rover is joining global industry leaders BMW, Audi and Mercedes-Benz in planning car production in the country, South America’s largest economy. Jaguar Land Rover, which Mumbai-based Tata Motors bought from Ford Motor Co. in 2008, is turning to emerging markets to pursue growth as sales gains slow in developed economies.

Jaguar Land Rover sold 346,935 vehicles worldwide in the 10 months through October, an increase of 18 percent from a year earlier, spurred by growth of 27 percent growth in China, and more than 40 percent in Brazil. The company’s top-selling model was the Range Rover Evoque, while the Jaguar XF sedan was the best-selling car.

Competitors’ Plans

Bayerische Motoren Werke AG (BMW), Volkswagen AG (VOW)’s Audi division and Daimler AG (DAI)’s Mercedes-Benz unit each have said in the past year that they’ll invest more than $220 million to assemble models in Brazil. Luxury-car producers expect demand in the segment to total about 100,000 vehicles a year by 2017, according to Philipp Schiemer, head of Daimler’s business in Brazil.

Total car sales in Brazil will reach a record 4.3 million this year, according to Anfavea, Brazil’s auto-industry trade group. The market is forecast to grow to 5.8 million units a year by 2020, according to a report by KPMG. The government plans to tax imported vehicles, encouraging automakers to build cars locally to avoid the levies.

In the quarter ended in September, Tata Motors posted profit that beat analyst estimates as rising Jaguar Land Rover sales outweighed a loss at the parent company’s Indian business. The unit accounted for 72 percent of group revenue and 88 percent of operating profit for the year ended March 31.

To contact the reporter on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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