David Bailey, one of the leading experts on the auto industry, has stated his belief that Jaguar Land Rover’s impressive return to profit during the last three months of last year is a firm indication that the company has finally found its feet following one of the worst recessions on record. Jaguar Land Rover recorded a profit of £55 million for the final three months of 2009, and this on the back of losses totalling £60 million during the previous quarter.
According to Tata Motors, the owner of JLR, the company’s strong recovery was due at least in part to much stronger general market conditions. Tata also added that additional new models added to its overall range had also aided the company’s performance, with sales rising 68% as compared to the previous period for last year. The sales figure totalled in excess of 165,000 models, with the majority of market growth being seen in North America, Russia, Europe and China.
Mr Bailey, who is professor of international business strategy and economics at Coventry University, stated that the Tata-owned JLR had recorded operating profits following proactive and aggressive cost-cutting measures as well as a rise in sales figures. Professor Bailey added that the improved sales figures were also thanks to upswings in markets such as China and the UK, as well as “through sheer hard work by the firm.” He added that the re-vamped 2010 Land Rover range was also performing strongly, and that the “stunning Jaguar XF is taking on all-comers, and its real benefits have yet to be fully recognised.”
Sales of Jaguar Land Rover increased by almost a quarter to 23%, rising to 44,300 vehicles – a figure up from 35,000 for the previous quarter. The UK market also recorded a rise in sales by a third to 14,400 vehicles. This figure was thought to have been largely helped by the confidence generated by the car scrappage scheme. Chinese sales also rose by 2.1% to 3,400, whilst sales in North America dropped by 7.3% to 9,600 largely as a result of the continued consumer switch to smaller, more fuel-efficient vehicles.
Professor Bailey went on to comment that the switch to more fuel efficient models indicates the importance of Jaguar Land Rover’s recent £800 million investment in green technologies, referencing the potential importance to the company of the LRX – the company’s lightweight hybrid known by some as the ‘baby Land Rover‘.
JLR’s parent company, Tata, has strengthened on the back of the receipt of more than half a billion in overseas funding, including around £170 million from GE Capital. With this JLR will have the ability to draw cash immediately as its cars leave the production lines which will serve to also boost the company’s working capital as it will shorten the 30-40 day waiting gap between the production of cars and their eventual delivery to dealerships.
In conclusion, Professor Bailey stated that he would prefer to see investment in UK industries by British state-owned banks and less support granted to hostile takeovers of successful British companies such as Cadbury. Professor Bailey believes that more government investment in new technologies would enable UK car manufacturers to really compete – especially with regard to electric cars.
Read more on this story, including more of Professor Bailey’s analysis at BBC.co.uk
