Jaguar Land Rover to spend Rs 1.2 lakh crore in next 3 years

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Logo of Tata Motors’ automotive company, Jaguar Land Rover
Logo of Tata Motors’ automotive company, Jaguar Land Rover

New Delhi : Tata Motors’ automotive company, Jaguar Land Rover (JLR) is planning to invest a whooping amount of Rs 1.2 lakh crore in next three years. It would be the biggest investment in its history, as it wish to stay in advance of Mercedes-Benz, BMW and Audi in the electric vehicles race. The decision will likely narrow the gap with the entrenched German rivals in the traditional luxury car market.

As per official sources, the funds will go into an unparalleled, 99-product programme that will include annual updates, new-generation cars, vehicles on the electric power-train, and four new brands that include the I-Pace and the new Defender. There will possibly be two more EVs.

Tata Motors NSE (National Stock Exchange) had paid $2.3 billion (equivalent to Rs 9,200 crore) for Jaguar Land Rover in June 2008 

The acquisition cost translates into 46% of the total revenue for FY09, while based on the financial year 2018 performance, it is equivalent to 3.9% of JLR's current revenue. 

Also, JLR's capital expenditure to sales ratio stood at 16.2% in FY 18, compared with 11% and 12.1% in 2017 for BMW and Daimler, respectively. Based on analysts’ estimates of JLR investments in the next three years, the capital expenditure to sales ratio will likely be 16.2%, 14.8% and 13.6%, respectively, over the period. 

Jaguar Land Rover is strengthening vehicle architectures from six to three, and transitioning to a modular vehicle platform with electrification as a vital element, which will ensure reduced cost in terms of economies scale. JLR will be coming out with new high quality crosswise architecture for small SUVs, modular longitudinal architecture for EVs, and even modular engine architecture that will prepare the company for future regulatory challenges. 

In a recent interview to ET, the CEO Ralf Speth said the automotive industry will see more positive changes in the next five years than it did in the last half a century. “JLR is now at a trigger point. We have to do again everything, so many things in parallel; it is going to stretch the company and also the financials,” he said. 

Of £13.5 billion, or Rs 1.20 lakh crore, of investment lined up for next three years, 51% of the total capex will be on products. Between financial year ‘11and financial year 18, JLR has spent £20 billion, or Rs 1.8 lakh crore according to the current exchange rate, on capex and during that period, sales increased 15% annually.