Land Rover Factory Opens
Jaguar Land Rover opened a new factory near Rio de Janeiro in Brazil on June 14. The manufacturing plant is its first fully-owned facility outside of the UK. The automaker joins rivals such as Volkswagen and General Motors in opening new factories in Brazil to circumvent high tariffs on imports and meet rules on locally produced goods.
The company will build the Land Rover Discovery Sport and Range Rover Evoque SUVs at the new factory, which has a maximum capacity of 24,000 vehicles but will produce less than 10,000 units this year.
JLR first announced its U$350 million (R$1260 million) investment in Brazil in 2013 as the auto market was extending a decade of growth. However, the previous growth market has since been followed by subsequent interest rate hikes, crumbling consumer confidence, and political turmoil, which has significantly suppressed sales 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. However, JLR said its sales rose 11 percent in the first five months of this year.
“The premium sector has more or less held its ground despite the recession, so share of total industry has grown for premium auto sales, 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 this year compared with last year. Still, that was far better than the 27 percent plunge recorded across the auto industry as a whole in Brazil.
Jaguar Land Rover opened its first non-UK plant in China in 2014 as part of a joint venture with local brand Chery, but the facility near Rio is JLR’s first wholly owned overseas site.
JLR, which sold just over half a million cars globally last year, is rapidly expanding its model lineup and will have a production capacity of up to 1 million vehicles by about 2020, with another new plant in Slovakia adding to existing output.
In other manufacturing news, Sony has decided to stop manufacturing smartphones in Brazil due to the current financial crisis. The end of tax exemptions for local production of smartphones and computers costing up to R$1500 has prompted Sony to sell now only imported devices in Brazil.
Sony’s marketing director, Ana Peretti, told news portal G1 that the decision was based on the current macroeconomic scenario in Brazil, but also was an attempt to make distribution more flexible. Prior to this announcement, Sony smartphones were produced in Brazil by Foxconn and Arima in manufacturing plants based in the state of São Paulo.
The decision is a big shift from Sony’s announcement of a multimillion dollar plan to expand in the Brazilian market just over a year ago. At that time, the company was confident about continued consumer demand for smartphones and predicted a sales increase even with the challenging market conditions.
Sony devices such as the Xperia X and Xperia XA, launched in Brazil earlier this month, are part of the new strategy and are assembled in China and Thailand.
Another mobile manufacturer that decided to downsize operations in Brazil recently is Xiaomi. The Chinese company ended its local manufacturing deal with Foxconn just a year after launching operations in Brazil.