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In the last few years, there have been a wave of announcements of new plants in Brazil. Tata was the last one, and this week its Itatiaia plant started getting closer to reality. On December 2, the company laid the foundation stone of what will be the first fully-owned Jaguar Land Rover factory outside of the United Kingdom. According to the company, 400 people will be employed, and the straight-time capacity accounts for 24,000 vehicles annually. Production starts in 2016.
There is no doubt that Land Rover is a favorite among luxury brands in Brazil. The Range Rover Evoque has been the best-selling luxury SUV since 2012 – first units were registered in November 2011. Last year, the Evoque’s registrations were more than three times its closest competitor, the Volvo XC60. The Discovery/LR4 also beats any of its rivals. For one GL that Mercedes-Benz sells, Land Rover sees almost four Range Rovers registered.
According to IHS Automotive's light vehicle forecast, Land Rover volumes should fall 11% this year, to 9,500 units, mainly because of the Freelander/LR2, which is in its last year of commercialization. It will be replaced by the Discovery Sport, so far the only SUV confirmed for the Itatiaia plant. The Freelander was Land Rover’s second most popular vehicle in 2013, when 1,761 units were registered.
Volumes may seem low to American or Chinese standards, but price is a huge limitation. Flown from Paris to São Paulo to be presented in the Americas for the first time during the Brazilian auto show, the Discovery Sport will be priced at BRL179,900 (roughly USD70,000 compared with the U.S. MSRP of USD37,070) when it hits the dealer network next year, still imported from England. Price will not be lowered with local production, despite not having to pay 35% of Import Tax. JLR says that 40% of its vehicles are financed in Brazil through its own financial arm.
Jaguar volumes are still very small in Brazil, but the brand has enjoyed one of the fastest growing rates since 2012, when JLR assumed the operations. In 2013, only 296 Jaguars were registered, but that represents a 458% growth from the previous year. The XF became a real competitor for the BMW 5-Series and the Mercedes-Benz E-Class. For this year, we forecast that 313 XF will be sold, compared with 398 E-Class and 371 5-Series. It is likely that only 52 Audi A6 will be registered.

We expect Jaguar registrations to soar 51% next year with the launch of the XE, also shown at the São Paulo auto show. Although IHS Automotive does not consider Jaguar products being made at the new plant, the company has said the factory is flexible enough to make any product of any brand – it will assemble the vehicles with kits imported from Europe. The level of South American components has not been disclosed, although JLR has mentioned it is looking into it. Nissan, PSA and MAN have plants in the same region and there is a net of suppliers already established there.
Our South American light vehicle production forecast accounts that, besides the Discovery Sport, the Range Rover Evoque and the Defender will be made in Itatiaia. In 2016, almost 10,000 units are expected to be assembled, with volumes reaching 18,000 by 2021. Definitely not a bad utilization rate for the Itatiaia plant.
Augusto Amorim is senior analyst, South American light vehicle production forecast, IHS Automotive
Posted December 5, 2014

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