Luxury car market is growing at a steady pace in India, prompting car makers to assembly more and more premium cars in the country. Currently no luxury car maker does local manufacturing as the market is still not big enough to justify investments in setting up a manufacturing plant. All this could change within the next few years and Mercedes-Benz is already contemplating producing MFA-platform vehicles in India, including the A-Class, B-Class, CLA and GLA. However the luxury automaker closest to home is still not ready for local production.
We are talking about Tata Motors, which owns Jaguar and Land Rover. The Indian car maker feels the market is not mature enough for local manufacturing of these premium and low volume luxury products. The hefty investments involved in setting up a manufacturing facility would make locally produced JLR vehicles costlier than imported ones. The British brands will soon start manufacturing products in China and Saudi Arabia, which is the first time production is being done outside the UK.
Why is Tata Motors not going for production in India? After all, it’s an Indian company. Firstly the volumes are too low to justify hefty investments. The company could make India an export base for JLR vehicles, as it would be cheaper to manufacture in India than the UK. However the taxation system and Government policies make it difficult for Tata Motors to set up an export plant. The company is hoping that the Indian Government makes it more favorable for automakers to invest in production facilities in the country.