Customer Logins
Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
Customer LoginsJLR begins GBP130-mil. investment at Halewood site, shelves plan to build compact SUV in India – report
JLR has begun the investment of around GBP130 million in its Halewood site, and has reportedly shelved plans to build a compact SUV in India.
IHS Markit Perspective
- Significance:JLR is undertaking further investment at its Halewood facility, while the company has reportedly shelved plans to build a compact SUV in India.
- Implications:The investment being currently made at Halewood appears intended to boost the efficiency of the site.
- Outlook:Although the project, which appears would have seen a compact Land Rover built in India, has been shelved, it could well be brought back at some point when the automaker has less on its plate and a more viable business case can be created.
Jaguar Land Rover (JLR) has begun investing a further GBP130 million (USD163 million) at its facility in Halewood (United Kingdom). According to a report in the local Liverpool Echo, this will come on top of the GBP600 million that has already been spent since 2010. GBP7 million will be spent on an extension to the southern end of the factory.
According to the plant's director, Stuart Lord, "We're going to be extending the logistics building, and also extending the front of the plant to allow us to create some turnaround space." Furthermore, a road that circles the plant within a periphery fence as well as a feeder road will be moved closer to an arterial road. The company is also spending GBP27 million extending the site to the north, including more space for its Trim and Final facility.
Other investments include a new GBP74-million stamping line that will manufacture metal components for vehicles built at Halewood and the OEM's other plants. It is said that the 2,400-tonne press is capable of stamping a new component every three seconds. This follows the installation of a GBP55 million stamping press at the site during 2016.
Separately, JLR is said to have shelved plans to build a new small sport utility vehicle (SUV) in India, reports The Economic Times - Kolkata Edition. According to the newspaper, the project is codenamed L860 and has been subject to a feasibility study; several teams from the UK visited India during the past year and meetings with component suppliers have taken place. Furthermore, some employees from India were reportedly posted to JLR's UK office to support the project. However, sources said that the feasibility project did not favour the move. Furthermore, one person explaining the decision added, "The company felt it was critical to secure two important bases, of Europe and the US... With the investment in Slovakia, it will be able to protect the European Union [EU] markets from Brexit and with the strong protectionism message from the US, it made sense to keep option of setting up a facility in the [North American] continent open in the eventuality of the [Trump] government enforcing high import duty ." However, a JLR spokesperson told the newspaper that the report was "pure speculation," before adding, "We do not discuss plans for future products."
Outlook and implications
The investment taking place at JLR's Halewood is not planned to boost vehicle production capacity at the site or require an increase in headcount from the 6,000 staff that are directly employed, on temporary contracts or supplied by DHL for logistic functions. However, it seems designed to improve the efficiency of the site which, like all of JLR's site in the UK, are running flat out to keep up with global demand. Indeed, it was reported last week that JLR has further increased its lead as the biggest producing automaker in the United Kingdom during 2016 having manufactured 544,401 units, a gain of 11.1% y/y. IHS Automotive forecasts that Halewood will have produced around 35% of JLR's UK production - made up of the Land Rover Discovery Sport and Range Rover Sport - during the year. However, we see production as having peaked in the near term, partly as a result of the current Range Rover Evoque starting to reach the end of its life and the Land Rover Discovery Sport having had a strong initial reception. Furthermore, the automaker will be able to rely more heavily on its sites in China, Brazil and India for supplying these local markets with these models. Nevertheless, it will remain dependent on the Discovery Sport and Evoque for the foreseeable future, according to our forecasts.
As for the report related to the L860 project, the code would denote that this was a Land Rover programme, and IHS Automotive sees this as a compact SUV that would be a smaller compatriot of the replacement Defender which is due to arrive during 2019 and be built at Nitra (Slovakia). The rationale for building this model in India stemmed from it gaining access to its parent company Tata Motors' production and supplier network in the country, as well as the cost-effective nature of producing a smaller, cheaper vehicle here. It could also have boosted the brand's presence in India. While the exact reason for the decision is unclear, the comments by the source suggest that the decision may be related to the changes that could take place to global trading patterns due to recent political moves. Even so, the comments made in the article also do not suggest that the L860 project is dead, and is more likely to be delayed. Indeed, the automaker already has a lot on its plate at the moment, and other projects than this - whether new models or plant investments - may be seen as more vital. Indeed, the company has been said to be keen on such a vehicle as it further broadens its range, particularly given the expected sales on a global basis seen at around the 50,000 units per annum (upa) level.
About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.