Tata Motors' Jaguar Land Rover opens first plant in China

Tata Motors' Jaguar Land Rover (JLR) opened its first plant in China in Changshu - 110km northwest of Shanghai - yesterday, allowing the carmaker to cut prices and boost sales in the world's largest car market.

It would probably choose the best-selling Range Rover Evoque as its first local production model at the 130,000-unit-a-year factory, with the potential to increase sales significantly, says consultancy IHS Automotive.

Foreign carmakers have been setting up factories on the mainland to avoid duties that make imported vehicles less competitive. JLR has said it expects local production to cut prices by 15 per cent, which may help it extend a lead over Fiat Chrysler's SUV-centric Jeep brand and narrow a gap with Volkswagen's Audi.

"Land Rover has a unique positioning in the market as premium car sales are booming, as are SUV sales," said Yale Zhang, managing director at research firm Autoforesight Shanghai. "A lot of customers in China want to upgrade to premium cars. At the same time, there are enough premium cars in China, so it won't be easy for Jaguar."

JLR will be competing in a market where demand for premium SUVs is forecast to double to 1.2 million units by 2020, with 18 brands competing for market share, according to IHS. In 2010, carmakers sold 183,781 premium SUVs on the mainland.

The SUV market on the mainland is dominated by Great Wall's homegrown Haval line, Volkswagen's Tiguan and Japanese models such as Honda's CR-V and Toyota's RAV4.

JLR's mainland sales climbed 39 per cent to 66,505 vehicles in the first nine months of the year, according to company data. The mainland's total vehicle sales grew at the slowest pace in 19 months in September.

The JLR factory opening comes after mainland antitrust authorities put pressure on at least seven carmakers to cut prices. In July, JLR said it would cut prices on three imported models by an average of 200,000 yuan (HK$253,000).