Press Report : JLR tight-lipped over reports of £1bn bail-out plea

Alun Thorne, Head of Business, Birmingham Post, 24th November, 2008

Jaguar Land Rover (JLR) has refused to be drawn on speculation that it is in secret talks over a Government bail-out but admitted it was facing some of its toughest ever trading conditions.

According to reports, the luxury car group – owned by Indian conglomerate Tata – had requested an emergency £1 billion loan to help it ride out the downturn in the global car market.

Figures out last month saw new car sales fall in UK to their lowest levels for more than 40 years with other developed countries experiencing a similar decline in sales as the global economic downturn saw consumers rein in their spending. The result has been almost universal cuts in output by the major car manufacturers with a number calling for central funding to help them through the recession.

In the UK, the Society of Motor Manufacturers and Trader (SMMT) is currently lobbying the Government over a £2-3 billion rescue package for the wider automotive industry and a spokesman for JLR said it was supporting this initiative but would not comment on any assistance it was specifically requesting on its own behalf.

He said: “Jaguar Land Rover supports both the UK (SMMT) and the European (ACEA) industry position that Government intervention is required to improve liquidity in the supply chain and support continued investment in carbon reduction technology as well as stimulating consumer demand. The French, German, US, Australian and Chinese are all considering industry support packages.

“The automotive industry is facing unprecedented trading conditions as a direct fall out of the banking crisis and turbulence in financial markets and we are, of course, keeping government appraised of the impact on our business. We are not going to comment on speculation on the content of confidential discussions with governnent.”

Lord Mandelson will be meeting representatives of the UK automotive and retail motor sector this week to discuss where Government action can help

A Business, Enterprise and Regulatory Reform (BERR) spokeswoman said she could not comment on individual cases.

“The Government clearly can see that these are unprecedented times for the global economy and for the global automotive sector,” she said. “Lord Mandelson will be meeting representatives of the UK automotive and retail motor sector this week to discuss where Government action can help.”

The success of the new XF model has seen Jaguar enjoy significant sales success over the past year, but Land Rover saw sales drop by more than half in October compared to the same month in 2007 – the most successful year in its 60-year history.

Over the past month, JLR has seen more than 600 of the firm’s 16,000 employees take voluntary redundancy with another 300 from Jaguar’s Castle Bromwich and Land Rover’s Solihull plants taking three months off for a 20 per cent cut in their salary.

Over the weekend JLR chief executive David Smith warned that large scale redundancies were a “probability” within the car industry and that they could be so severe that the UK economy could be permanently damaged.

He said: “For every job in the manufacturers, there are four or five in the supply base. It is important we don’t lose that supply base because it is still a dcent one, providing research and development and engineering jobs.”

Specifically about JLR, Mr Smith could not rule out further cuts. “I hope demand picks up so we don’t have to make any more,” he said.

[Source: Birmingham Post]

Clive Goldthorp

About the Author:

Clive claims that his interest in the BMC>MG story dates back to his childhood in the 1960s when the family’s garage premises were leased to a tenant with an Austin agency. However, back in the 1920s and 1930s, his grandmother was one of the country’s first female Garage Proprietors so cars probably run in his genes! Admits to affairs with Alfa Romeos, but has more recently owned an 06/06 MG TF 135 and then a 15/64 MG3 Style… Clive, who was AROnline’s News Editor for nearly four years, stood down from that role in order to devote more time to various Motor Racing projects but still contributes articles on as regular basis as his other commitments permit.

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  1. Hmm, is the master plan from David Smith for JLR appearing to have broken down already??? Wasn’t he on about moving the brand seriously up-market!!! Berk.
    They should look to their roots.

  2. ian says:

    I’ve had my doubts for some weeks about this David Smith. He’s never looked or sounded like he has the ability to lead a global luxury car maker. Where did he pop up from?

  3. alex scott says:

    I agree with Chris Cowdery the brand is already too far up market. they need to immediately introduce some budget concious no frills options just like an everyday car even it has a different badge on it (Rover). alex

  4. Ken Strachan says:

    If little old MGR could convert the 75 to RWD, I’m sure JLR have the resources to do the X-type properly – that is, RWD. The decision to not replace the X now looks seriously flawed; but who could they share a platform with? I don’t suppose either Mercedes or BMW would want to reinvigorate their rival! But Lexus are suffering, and Nissan could probably do with some more volume on the 350Z floorpan. Crazy ideas for crazy times!

  5. jon says:

    what rubbish has been printed here, you cant blame anyone person WITHIN the motor industry for the sales crash, as it is Jaguars sales are UP, NOT DOWN, as for calling him a berk, i suggest you grow up, if it was not for the forsight in making the XF vastly different from what has gone before the company would not be around for much longer, in the same way that Rover eventually ended up, too much retro and old man image.
    Jaguar took the step of going ain a different direction, this has worked for them, and the XF has become a major success, and on the back of that the X-type sales increased initially before the WORLD CREDIT CRUNCH hit.

    NO ONE at Jaguar has indicated that the X-Type will not be replaced, in fact i have it on reliable infomation that the current model will be around until at least autumn 2010, it has just had a significant upgrade, i know i own one, and an XF for that matter, ALL major car manufacturers have suffered not just these ones, so to “slag” of just one or two people within one company is down right ignorant.

    David Smith, who has been the chief financial officer for the Jaguar and Land Rover brands since 1 March, has also been the acting chief executive of JLR. Previous to his recent promotions, the new chief executive, who has been a Ford employee for 25 years, was director of finance and strategy for Ford of Europe and the former Premier Automotive Group.

    So as you can see he has a vast amount of experience in the motor indutry and in these difficult times maybe a littl more ivility andthough should go intocomments rther than just slagging people forthe sake of it.

  6. Hong Yhi says:

    Well said Jon

  7. Merlin Milner says:

    For £1b the government to could buy a substantial part of the business.

  8. Hilton Davis says:

    This story begs the question… If MGR had received a government loan in 2005 and the SAIC deal had proceeded, what situation would they be in now? Perhaps stronger, or floundering, awaiting for collapse again?

    One imagines and assumes the bigger players (JLR?)can weather the current economic downturn… I’m not sure, but am hopeful.

  9. didierz65 didier ziane says:

    re: comments # 7 & 8. the answer was quite easy, tony and gordon didn’t want to nurse the english patient!!! bear in mind billions ( of today’s money ) had already been wasted in the 70’s and 80’s.. had mgr survived till today, there would be cash available, but in 2005, it wasn’t fashionable to sustain private businesses with public money… “another might have been”, one can hope chinese know what they’re up against in the current economic conditions.

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