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Jaguar Land Rover opens first fully owned overseas plant in Brazil

LONDON (Reuters) - Luxury carmaker Jaguar Land Rover (JLR) opened a new plant in Brazil on Tuesday, its first fully owned facility outside of Britain, as part of an investment announced before car sales began nosediving in the world’s ninth-largest economy.

Showroom attendants polish a vehicle under a Jaguar logo at a Jaguar Land Rover showroom in Mumbai February 13, 2013. REUTERS/Vivek Prakash/Files

The Tata Motors-owned automaker joins rivals such as Volkswagen and General Motors in setting up plants in the nation of 200 million people to circumvent high tariffs on imports and meet rules on locally produced content.

JLR first announced its 240 million pound ($350 million) investment in Brazil in 2013 as the market just ended a decade of growth with subsequent interest rate hikes, crumbling consumer confidence and political turmoil pushing down demand.

This year, sales of new cars in Brazil are expected to be below 2.1 million vehicles, nearly half the peak of 3.8 million in 2012. But JLR said its sales rose 11 percent in the first five months of the year.

“The premium sector has more or less held its ground, so share of total industry has grown for premium and we’ve been able to robustly hold our position,” JLR’s Project Director for Brazil Julian Hetherington told reporters in London.

Registration data from Brazilian automakers association Anfavea, which often lag sales figures due to licensing delays and third-party upgrades, showed a 4 percent drop in JLR sales from January to May compared with last year. Still, that was far better than the 27 percent plunge recorded across the auto industry.

Jaguar Land Rover opened its first non-British plant in China in 2014 as part of a joint venture with brand Chery, but the facility near Rio de Janeiro will be its first wholly owned overseas site.

The firm will build both its Land Rover Discovery Sport and Range Rover Evoque sport utility vehicles at the plant, which has a maximum capacity of 24,000 vehicles but will produce less than 10,000 units this year.

JLR, which sold just over half a million cars globally last year, is rapidly expanding its model line-up and will have a production capacity of up to 1 million by around 2020 with a new plant in Slovakia adding to existing output.

However, the firm fully funds its investments without support from parent Tata Motors. As a result, its 2015/16 pre-tax profit fell 40 percent to 1.6 billion pounds, also partly due to a drop in sales in China, formerly its fastest-growing market.

($1 = 0.6862 pounds)

Additional reporting by Brad Haynes in Sao Paulo; Editing by Hugh Lawson