Jaguar Land Rover Ended 2016 With Highest Relative Growth Compared To Peers

-62.32%
Downside
25.14
Market
9.47
Trefis
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TTM
Tata Motors

The British marquee brand Jaguar Land Rover forms more than 90% of Tata Motors‘ (NYSE:TTM) valuation, according to our estimates. Although the brand forms roughly half of the net volume, its higher average price per unit, broader margin, and higher expected rate of growth in the future, are the reasons for its high contribution to Tata’s overall value. Jaguar, in particular, had a solid 2016, as the brand introduced new models in high-growth segments such as the entry-level premium vehicle segment (Jaguar XE and F-Pace). In 2016, JLR reported record-breaking results, selling 583,312 vehicles, up 20% year-over-year. In fact, the automaker beat the growths of its chief competitors — the German trio of Mercedes-Benz, BMW, and Audi, in terms of growth rates in crucial markets such as China, Europe, and the U.S.

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This impetus in growth is expected to continue into the new year and going forward, especially considering the automaker has opened its Brazilian production plant, and is planning a new plant in Slovakia, which will augment its supply. Jaguar witnessed a whopping 77% year-over-year growth in unit sales in 2016, on the back of strong sales for the compact Jaguar XE and the performance SUV Jaguar F-Pace, which together formed 65% of Jaguar’s net volumes in the last month of the year. Trefis estimates Jaguar’s unit sales to grow at a CAGR of 9% between fiscal 2017 (ending March 2017) and fiscal 2024, and Land Rover’s unit sales to grow at a CAGR of 10%. This means that Trefis expects JLR to cross a million unit sales by the year 2022. Given the supply increase the company is expected to witness with new production plants, and continual strong growths in crucial markets, the million mark could even be reached as soon as 2020.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Tata Motors

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