| | Jaguar-Land Rover to reduce platforms for cost effective strategy?
Tata Motors Jaguar and Land Rover (JLR) business will make more models on fewer platforms as it prunes cost and simplify manufacturing lines.
An automobile platform is a shared set of components common to a number of different automobiles. Fewer platforms increases flexibility and offers greater use of a plant. It also reduces product development time through a fixed set of engineered components.
The Mumbai-headquartered Tata group flagship will have four platforms instead of nine in the next 2-3 years, thanks to new technology.
Reducing complexity across vehicle lines, including where appropriate sharing elements of vehicle architecture-brings advantages in a number of areas of which cost is one. Jaguar Land Rover constantly looks for opportunities to improve efficiency throughout its business but does not comment on its future model plans, said a company spokesperson.
Tata Motors is initiating joint development programmes with its UK subsidiary JLR, which it acquired in 2008, for engines, vehicles and platforms.
According to Mahantesh Sabarad, analyst at Mumbai based Fortune Equity, Rationalising platforms for various models will help the company reduce R&D cost. The companys capex plans stand at 800 million, which would substantially increase in the next two years due to the stricter emission standards in Europe. The company had a capex of 206 million in the first quarter of 2011.
The recent upswing in luxury car sales in Europe and US has driven JLR to raise its sales target to 2.4 lakh units in 2010-11. The luxury-car maker plans to unveil new models including a station wagon and a roadster even as its considering an entry -level model, Ratan Tata said in the companys latest annual report. The Evoque(the small Land Rover) is likely to be launched in the middle of 2011.
The auto major reported a consolidated profit of Rs 1,979 crore for the first quarter against a loss of Rs 334 crore in the year-ago period.
A shift in product mix towards higher margin vehicles as well as reduction in incentives, higher prices of the new 2010 range of models and new product launches such as the Jaguar XJ improved the top line to 2262 million and enabled the company post an operating profit of 339 million for the quarter ended June 2010. Jaguar Land Rover posted a profit of 221 million (Rs 1,613 crore) for the quarter against a loss of 64 million.
Buoyed by recovery in certain months, demand for luxury cars has gone up in recent months, leading BMW, Mercedes, Audi and other players to raise guidance.
Under the circumstances JLR is expected to continue operating at high capacity. While cost cutting measures may be somewhat offset by currency fluctuations, JLR profitability is expected to continue at this level, said another analyst.
Source : ET