Jaguar Sees New Models, Europe Demand Helping Offset China Slump

U.K. Range Rover Production Line At Jaguar Land Rover Plant
An employee scans an identification label on a Range Rover Sport SUV as it moves along the production line at Tata Motors Ltd.'s Jaguar Land Rover vehicle manufacturing plant in Solihull, U.K., on Wednesday, July, 15, 2015. Jaguar Land Rover, the U.K. luxury-car unit of Tata Motors Ltd., has cut its sales targets and prices in China amid slowing demand in the world’s largest auto market. Photographer: Chris Ratcliffe/Bloomberg

Jaguar Land Rover expects to meet its target for record annual sales with the introduction of new models and expansion in Europe, offsetting a slump in the Chinese car market.

“Overall, we see strong demand in Europe and more particularly in the case of JLR because of product pipeline and models,” C. Ramakrishnan, group chief financial officer at parent Tata Motors Ltd., said at a press conference in the company’s home city of Mumbai on Friday. “With growth in other markets, we expect to meet our sales targets for the year.”

Jaguar Land Rover is counting on expansion in markets like Europe, where industrywide car-sales gains accelerated to the fastest pace in 5 1/2 years in June. The luxury unit of Tata Motors, which posted its fourth straight quarterly profit decline, also expects rollout of models including a new version of its XF sedan and a facelifted Evoque sport utility vehicle to spur demand, even as it looks to ramp up local production in China.

“The overall long-term story does look intact with their new models, especially on the Jaguar side,” said Juergen Maier, a fund manager in Vienna at Raiffeisen Capital Management, who oversees about $1 billion in assets including Tata Motors stock. “I’d be more worried if their new models failed rather than the current scenario.”

Jaguar Land Rover had forecast in January that sales will climb to more than 500,000 vehicles this year from 462,678 units in 2014, helped by new models such as the entry-level Jaguar XE sedan and the Discovery Sport SUV from Land Rover. Sales fell 0.5 percent to 239,212 units in the first six months.

China Decline

Demand in China has been a key reason for that decline. JLR deliveries plunged 33 percent in the Asian nation, while sales in Europe climbed 28 percent in the quarter ended June. The luxury unit has cut its sales targets and prices in China as automakers from Toyota Motor Corp. to BMW AG warn about a slowdown in the world’s biggest auto market.

Jaguar Land Rover said it has lowered the Evoque’s price in China and “realigned” pricing for the introduction of the new Jaguar XE there. The unit sees profit margins narrowing in the year through March 2016, compared with the previous 12-month period as demand wanes in China.

“As a trend in the future, we do see a strong potential of China,” said Ramakrishnan. “But we can’t say what China will contribute to overall sales.”

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