CHANGSHU China (Reuters) - British luxury carmaker Jaguar Land Rover Ltd [TAMOJL.UL] sees sales growth in China roughly halving this year and decelerating even further next year due to a larger base of comparison and slower expansion of the world's largest auto market.
Growth of 20 percent would compare with around 40 percent last year, said Jaguar Land Rover's top executive in China, the biggest and fastest-growing market for the subsidiary of India's Tata conglomerate.
Jaguar Land Rover opened its first overseas factory in China on Tuesday. By manufacturing locally, the automaker can avoid heavy import duties and price its vehicles more competitively in a fast-growing luxury car market dominated by German brands Audi (DE:NSUG), BMW (DE:BMWG) and Daimler's (DE:DAIGn) Mercedes-Benz.
"The market is a little bit slower in the second half compared with the first half," Jaguar Land Rover's head of Greater China, Bob Grace, said on Tuesday without elaborating.
China's auto market grew in September at the slowest pace in 19 months. The market is in a state of flux with a government investigation into anti-competitive practices, prompting makers such as Jaguar Land Rover to lower prices. Meanwhile the luxury segment has taken a hit by a government campaign against extravagance among public officials.
"As our volume in absolute terms gets bigger and bigger, it becomes harder to keep doing the double-digit growth. I would expect next year to slow a little bit in comparison to this year." Grace told reporters at the new factory in the eastern Chinese city of Changshu, two hours' drive from Shanghai.
"We'll still see reasonable growth but it won't be the stellar growth we've seen in recent years," he said. Sales will, however, benefit from the new factory, which is scheduled to go into full production in 2016, he said.
Jaguar Land Rover's first China-made vehicle, the Range Rover Evoque, rolled off the Changshu production line on Tuesday. The factory is equally owned by the British carmaker and local joint-venture partner Chery Automobile Co Ltd [CHERY.UL].
Jaguar Land Rover and Chery have committed to investing 10.9 billion yuan (1.10 billion pounds) in the plant, which has an annual production capacity of 130,000 vehicles.
The Range Rover Evoque is Jaguar Land Rover's first China-made model, and the company plans to make two more models locally by 2016. It also said, without elaborating, that it will make models and derivatives designed for the Chinese market.
(Reporting by Samuel Shen and Kazunori Takada; Editing by Christopher Cushing)