Saturday, February 28, 2009

Chinese balm for JLR

S KALYANA RAMANATHAN / London March 1, 2009,

Gets orders worth $850 million spread over 3 years.

Jaguar and Land Rover (JLR), owned by the Tata group, have received a massive boost from China in the form of an order for 13,000 cars, worth £600 million ($850 million, Rs 4,400 crore), to be delivered over the next three years. The order is part of the business secured by a UK industries from a Chinese trade delegation that visited the country a few days ago.

“This is a very significant order, underlines the importance of the Chinese market and the commitment of our partner. Sales of our vehicles in China have been growing rapidly over recent years and it is now our fifth-largest market in the world,” a JLR spokesperson said. “The confirmation provides us with a solid base on which to further build our presence in this key emerging market and is particularly welcomed at this challenging time for us and the automotive industry.”

Sources in the UK automotive industry further said that the order from China is for 10,000 Land Rovers and 3,000 Jaguars. The value of the order is a little more than half what the Tata Group paid (£1.15 billion) for the two iconic nameplates last year.

This development should come as a morale booster for the two brands at a time when the global automotive industry is faced with shrinking sales, making plant closures and retrenchments a common practice. In 2008, Land Rover had witnessed a 17 per cent fall in sales, while Jaguar improved its sales by 8 per cent.

JLR is at present implementing the tail-end of a cost-cutting exercise that will let go of 450 workers, taking the total job losses in the group to 2,000 over the past few months. Some 12,000 workers at the two companies, spread over six sites, are at present voting for a no-job-loss deal with the management that will involve a pay-freeze and reduced working hours for the next two years resulting in savings of £70 million (Rs 510 crore) annually for the company. The result of this ballot will be formally announced on March 6.

In January, according to industry estimates, car production in UK fell 58.7 per cent to 61,404 units, while production of commercial vehicles fell nearly 60 per cent to 8,351 units. Last month, the UK government had announced a plan to help the automotive industry, which includes guarantees to provide loans of up to £1.3 billion from the European Investment Bank, as well as a further £1 billion in UK government loans to fund investments in environment-friendly vehicles.

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