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Land Rover as a brand has managed to strike a successful balance between high-priced luxury and rugged off-road capability.
The sport utility vehicle brand has developed a certain cult following, with its limited edition Range Rovers models — which can go for £300,000 — especially popular around the world. The share price of Tata Motors, the owner of the Jaguar Land Rover unit, has started reflecting that price-insensitive following.
Shares of Tata, India’s largest carmaker, rose 6 per cent to a record high on Monday. Net profit more than doubled in the three months to December, beating expectations, driven by strong sales in its wholly-owned British subsidiary.
Unlike rivals that battled a slowdown in sales growth last year, JLR — which accounts for about two-thirds of its parent’s sales — posted a 22 per cent rise in sales during the quarter.
Strong demand for JLR’s output, which are Tata’s most profitable models, has meant less of a need to participate in the price wars among global automakers, which have become especially fierce among electric-vehicle makers. Tata Motors’ stock has more than doubled over the past year, far outpacing the Indian market — quite a feat for a company with a market value of more than $40bn.
Tata has long had a focus on sports utility vehicles. Despite concerns about climate and congested city centres, cars have been getting bigger as consumer demand for large SUVs increases. The risks are that the backlash to these outsized vehicles grows: Parisians this weekend voted to raise parking fees for SUVs. On average, SUVs also consume about a fifth more oil than an average medium-sized car, according to the International Energy Agency.
But the Indian company is working on catching up in the shift to electric by launching three of its own electric SUVs this year. A waiting list for pre-order for the fully electric Range Rover is open.
Meanwhile, Tata is also set to reap the benefits from a strong home market. Indian carmakers’ sales hit a record in January as dealers built up inventory of new models and as consumption growth is set to accelerate in the country.
Like its most successful cars, Tata Motors now comes at a price: the shares trade at 12 times forward earnings, a premium to global peers including Toyota and Volkswagen. That reflects expectations that higher production of top Land Rover models in the coming quarters will keep sales volumes strong. The brand’s loyal fan base should, for the moment, keep this off-roader on track.
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