Tuesday, May 18, 2010

JLR set to wrap up $850-mn order one year in advance

S Kalyana Ramanathan / London May 18, 2010

The times, they are a-changin’... From a painful 2008-09, when global car sales plummeted, the signs of recovery in 2010 have never been clearer. Tata Motors-owned Jaguar Land Rover (JLR) is set to wrap up the £600-million ($850 million) three-year Chinese deal it had bagged in February 2009, one year ahead of schedule.

A JLR spokesperson told Business Standard the company was confident of completing delivery of the 13,000-car deal by the end of 2010 itself, as against the schedule of 2011-end.

In February 2009, when luxury and premium car maker JLR was under stress with sales numbers sinking, it got its first big break with the order from a Chinese delegation that visited the UK at the start of 2009. The order was for 10,000 Land Rovers and 3,000 Jaguars. The status of the delivery breakup for these two parts of the deal is not known, though.

The Chinese order was a major morale booster for JLR-owner, Tata Motors. The order by value is a little over half the price Tata Motors paid (£1.15 billion) for the two iconic name plates in 2008. The massive order is from an importer based in Shenzen, in South China's Guangdong province.

It is not clear at this stage if this impressive delivery performance will have any major impact on other difficult decisions the company has been forced to take recently. In April 2009, JLR had asserted it had no plans to reconsider an earlier decision to close one of its plants in the UK — a decision that expected to enable production rationalisation. An announcement on this, as scheduled originally, will be made by the middle of 2010. In September 2009, the company had announced it would be forced to close one of its three midland plants as a cost-cutting measure. The company as a whole employs around 14,000 people and the three assembly plants employ 9,000 workers — 5,000 in Solihull, 2,000 in Castle Bromwich and 1,800 at Halewood. Castle Bromwich makes some Jaguar models, Solihull makes the Land Rover Defender and Discovery, the Range Rover Sport and Range Rover, and Halewood makes the Jaguar X-Type and Land Rover Freelander models.

Apart from the new cost-cutting measures, the company has also revamped its top management. It has brought in Carl Peter Forster, former head of General Motors Europe and Ralf Speth from BMW to lead the turnaround. The start of 2010 also saw the exit of the then CEO, David Smith, who had spent 18 months to revamp the company’s operations.

Since the start of 2010, JLR has reported impressive improvement in sales. JLR’s global sales in April 2010 were 17,909, higher by 61 per cent. Jaguar sales for the month were 3,559, almost the same as last year in spite of the withdrawal of X-Type. The Jaguar XF sales were up 23 per cent, while Land Rover sales were 14,350, higher by 89 per cent. In March 2010, JLR sold 23,538 vehicles, higher by 43 per cent. Jaguar sales for the month were 4,642, higher by eight per cent, while Land Rover sales were 18,896, higher by 55 per cent. However, cumulative sales of JLR for the financial year are 193,982 units, lower by 11 per cent. Cumulative sales of Jaguar are 47,418, lower by 24 per cent, while cumulative sales of Land Rover are 146,564, lower by six per cent.

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