AROnline news

Gasgoo.com, 27th July, 2009

China’s leading automaker, Shanghai Automotive Industry Corporation (SAIC), has completed 67 percent of its 2009 sales target during the first half of this year.
 
SAIC sales surged 29.3 percent from a year earlier to 1.23 million units during the six months, with a growth rate higher than the country’s average. The automaker ranked first among the top 10 Chinese automakers in terms of sales during the year’s first half, according to statistics released by the China Association of Automobile Manufacturers.

Passenger vehicle sales rose 22.4 percent from a year earlier to 675,127 units, while commercial vehicle sales jumped 38.9 percent to 550,441 units.

SAIC Motor Passenger Vehicle Co, a wholly owned subsidiary of SAIC, also reported sales growth of its homegrown models. During the first half of 2009, sales of its Roewe and MG cars rocketed up 274.4 percent to 40,197 units. Monthly sales of Roewe 550 reached as high as 6,000 units.”

All of its three major joint venture subsidiaries claimed a boom in sales during the half year. Shanghai Volkswagen led Chinese passenger vehicle producers with sales at 314,011 units, up 15.4 percent from last year’s period. Shanghai GM sales hit a record high of 288,854 units, up 16.1 percent. And SAIC-GM-Wuling Automobile also achieved a high, with sales up 48.6 percent to 492,985 units.

SAIC Motor Passenger Vehicle Co, a wholly owned subsidiary of SAIC, also reported sales growth of its homegrown models. During the first half of 2009, sales of its Roewe and MG cars rocketed up 274.4 percent to 40,197 units. Monthly sales of Roewe 550 reached as high as 6,000 units.

SAIC President Chen Hong said that the company would take all efforts to complete the annual sales goal and focus on inventory and cost control during the year’s second half.

An official from the company told the press that inventories in factories and dealers have been declining in past months, but company leaders would not expand capacity in haste.

As for the SAIC-Nanjing Auto merger, Chen Liang from Huatai Securities said that the merger is still going on and needs a few years to finally create benefits. It is predicted that losses of Nanjing Auto will be around 600 million yuan in 2009 and 2010.”

Automakers are not active in expanding investments, which suggests that they have no confidence whether the sales boom will last, according to Li Jun, an analyst from Guosen Securities.

As for the SAIC-Nanjing Auto merger, Chen Liang from Huatai Securities said that the merger is still going on and needs a few years to finally create benefits. It is predicted that losses of Nanjing Auto will be around 600 million yuan in 2009 and 2010.

Though SsangYong Motor brought 2.28 billion yuan losses to net profit of SAIC in 2008, Chen predicted that SsangYong would cause no more than 928 million yuan losses after the second quarter.

[Source: Gasgoo.com]

China Watch Chen Hong, Roewe 550, SAIC Group, SAIC Motor

David Bailey, Birmingham Post, 27th July, 2009

Jaguar Land Rover Automotive Assistance Programme, European Investment Bank, JLR, Ravi Kant, Tata Motors

Howard Wheeldon, Birmingham Post, 28th July, 2009

Birmingham-born Analyst Howard Wheeldon points the finger at the Government in the latest round of posturing over the future of Jaguar Land Rover.

I am indebted to the Birmingham Post last week for the following: Taken from a letter dated July 16 2009 from Business Secretary, Lord Mandelson to Ravi Kant, Tata Motors Vice-Chairman – “As we discussed, I am concerned at the lack of pace on the Tata side in considering negotiations on possible UK Government support to Jaguar Land Rover.”

I should go on to list other embarrassing innuendo contained into the no-doubt deliberately ‘leaked’ Mandelson letter but I will save you further frustration preferring in this case to leave it to your imagination! Clearly, the somewhat ridiculous and unnecessary letter and what subsequently followed was an attempt by the Government to shift the pressure of blame for delay sorting the Jaguar Land Rover European Investment Bank (EIB) loan guarantee request away from the Government and back on to Tata Motors’ management.

Note, though, that the sudden burst of enthusiasm on the part of Mandelson and the Government team came directly following criticism from other MPs. Indeed, it is quite possible that the leaking of this letter to the Coventry Telegraph last week may have been primarily aimed at JLR workers and Midlands-based votes hoping to convince them that it is Tata that has been holding up agreement rather than Lord Mandelson. If so, what rubbish this is and how typical of this particular Government!

Whatever, I am left in no doubt that this latest attempt by Mandelson to walk away from the heavy responsibility it has to JLR and its workforce in attempting to sort out what is essentially a simple matter that comes at no cost and very minimal risk to the British taxpayer has completely failed in its objective.

Whatever, I am left in no doubt that this latest attempt by Mandelson to walk away from the heavy responsibility it has to JLR and its workforce in attempting to sort out what is essentially a simple matter that comes at no cost and very minimal risk to the British taxpayer has completely failed in its objective.” Howard Wheeldon, Senior Strategist, BGC Partners

Reading through the leaked Government letter and being well aware that it is the British Government that has completely failed to get its act together on the JLR guarantee support issue debate – and noting, too, the likely inevitable destruction of trust from a Tata management perspective – these latest bully boy tactics are nothing short of a second insult and humiliation to the Indian-based company that bought JLR last year.

The letter was a follow up to what the (then) Department for Business, Enterprise and Regulatory Reform (BERR) would have us believe was a revised second offer to the company in response to a request for UK Government assistance in guarantees that had its origins no less than ten months ago.

As a response to the Tata request for the British Government to guarantee a £340 million EIB loan it probably reads very little differently to the first although it is just possible that it did move the matter on a touch. However, even if subsequent negotiations have made some progress please don’t think that the Government has changed its mind in being prepared to guarantee more that the £175 million contained in the original offer against the requested £340 million agreed EIB loan offer.

The leaking of this letter needs to be explained and will clearly have further dented trust between Tata and the British Government – leaving Mandelson’s request to speed up talks looking rather absurd.” Howard Wheeldon, Senior Strategist, BGC Partners

I can confirm none of this but I am led to believe that the timing limit of any proposed Government guarantee is set to remain at just six months although it is just possible that the ridiculous 15 per cent up-front charge has been dropped.

That Lord Mandelson had also had the cheek to go on television last week calling on Tata to quicken the pace of talks had not escaped my notice. Bad enough though this was, far worse was the fact that together with the leaked letter it effectively breached an agreement with Tata Motors to negotiate in private. The leaking of this letter needs to be explained and will clearly have further dented trust between Tata and the British Government – leaving Mandelson’s request to speed up talks looking rather absurd. However, whilst the official line of the Government is to push the onus for delay on to Tata and to suggest in public that the Government has a duty to protect taxpayers I am increasingly of the view that beneath the surface there is a softening of the Government’s position.

Given the criticism this does not surprise me. I am reliably told that the Government is seeking that the JLR issue should be resolved quickly and that, while intending to retain some broad principles of the original offer, we should expect larger sticking points to soon be removed. My guess is that, given removal of the most onerous of the original terms, Tata Motors would likely then accept a better-than-nothing deal with the British Government – maybe over the next ten to 15 days. 

[Source: Birmingham Post]

Jaguar Land Rover European Investment Bank, Jaguar Land Rover, JLR, Lord Mandelson, Ravi Kant, Tata Motors

John Reed in London and James Fontanella-Khan in Mumbai, Financial Times, 28th July, 2009

Tata Motors said yesterday that it had appointed KPMG and Roland Berger Strategy Consultants to advise it on cost-cutting and cash management at its loss-making Jaguar Land Rover luxury business. The move came as India’s biggest vehicle maker reported a 58 per cent rise in first-quarter profit , helped by asset sales and falling steel prices, which offset a drop in its car sales.

“We have appointed two consultancies who are working with us,” said the carmaker, owned by the Tata Group. “The exercise is on cash flow, cost controls, etcetera [and] this will bring about major improvement over a period of time.” Tata said the consultancies had been inside Jaguar Land Rover for just over two months.

“It’s a very hands-on approach, with every fortnight discussions [with the two consultants] to reach break-even point,” said Ravi Kant, Tata Motors’ Vice-Chairman. Mr Kant said the company had used part of its sale of 1.5 per cent of Tata Steel to repay $150m of an outstanding $1bn bridge loan it took to acquire Jaguar Land Rover .

Jaguar and Land Rover are reeling from the global collapse of luxury car sales. The carmakers reported a combined net loss of £673.4m ($1.1bn) in their core UK market last year. Tata Motors bought Jaguar Land Rover from Ford Motor for $2.3bn in June 2008, just as sales of larger vehicles were beginning to fall.

Tata Motors has done really well and I feel that on the domestic front they won’t have any major challenges. On the Jaguar Land Rover front, there are still some serious concerns and it is unclear when they will be able to turn things around.” Vaishali Jajoo, Autos Analyst at Angel Brokers in Mumbai

Tata Motors, which recently launched the Nano, the world’s cheapest car, beat analysts’ expectations as its net profit rose to Rs5.14bn ($107m), compared with Rs3.26bn a year ago, in spite of a 7.8 per cent drop in sales to Rs63.5bn. One of the main reasons for the rise in profit was Tata Motors’ sale of “long-term investments” – including the Tata Steel stake – which helped the group to raise Rs3.19bn.

Analysts said that Tata Motors’ positive first-quarter results did little to alleviate the problems the carmaker faces in the UK. “Tata Motors has done really well and I feel that on the domestic front they won’t have any major challenges,” said Vaishali Jajoo, Autos Analyst at Angel Brokers in Mumbai. “On the Jaguar Land Rover front, there are still some serious concerns and it is unclear when they will be able to turn things around.”

Tata Motors, JLR and the UK Government have been locked in long-running talks on state loan guarantees Tata says it needs to prop up the carmakers. They are now close to agreeing terms of a state guarantee for a £175m commercial bank loan that would be granted under Britain’s £2.5bn automotive assistance programme , according to people close to the talks.

[Source: Financial Times]

Jaguar Land Rover Jaguar Land Rover, JLR, Ravi Kant, Tata Motors, Tata Nano

John Reed, Financial Times, 27th July, 2009

Jaguar and Land Rover’s core UK operations swung from a combined net profit of £641.5m in 2007 to a combined net loss of £673.4m ($1.1bn) last year. The “total recognised losses” at the two carmakers – including actuarial and other losses related to their pension schemes – reached nearly £1.2bn last year, according to accounts filed with Companies House last week.

News of the amount of money Jaguar Land Rover is losing in the UK comes as the carmakers and their owner, India’s Tata Motors, strive to conclude long-running and increasingly acrimonious talks with the British Government over short-term financing.

The Government says it is prepared to offer JLR a guarantee for a £175m commercial bridging loan, according to a person briefed on the talks. That is significantly less than Tata has been seeking. Tata is pushing for a 12-month term for the loan, while the Government wants six months.

Tata Motors had asked for loan guarantees for commercial financing worth about £500m and for a £340m European Investment Bank loan to help finance investments in lower-emission vehicles. The Indian group has pumped more than £1bn into JLR to cover losses since the financial crisis began. Tata bought the brands from Ford Motor for $2.3bn last year, just as sales of large and luxury vehicles began to plummet.

JLR said yesterday the accounts covered only its UK operations, and did not consolidate its businesses elsewhere. The group acknowledged that the figures “demonstrate the significant impact of the global recession and credit crunch on the automotive [industry] and the premium segment in particular.”

JLR’s talks with the Government on loans have dragged on since last October. Citigroup and Standard Chartered have been advising Tata in its efforts to raise financing. In the past week the Government has signalled its willingness to soften conditions it wanted attached to a loan guarantee, including board representation.

JLR said yesterday the accounts covered only its UK operations, and did not consolidate its businesses elsewhere. The group acknowledged that the figures “demonstrate the significant impact of the global recession and credit crunch on the automotive [industry] and the premium segment in particular.”

JLR said Jaguar’s 2007 results included a £308.7m gain from the sale of its shares in Aston Martin, another of Ford’s luxury brands, which was sold to Kuwaiti investors that year. Excluding exceptional items, Jaguar’s pre-tax loss of £38.3m in 2007 had narrowed slightly to a £34.1m loss last year, JLR said.

In its accounts, Land Rover said it had arranged borrowing facilities of £100m and $486m between January and May, $300m with banks and the rest with Tata-affiliated companies that had confirmed they would roll the facilities over into 2010 if needed. JLR said it had a letter of intent for another £100m for at least a year from a Tata-affiliated company.

[Source: Financial Times]

Jaguar Land Rover European Investment Bank, Jaguar Land Rover, JLR, Tata Motors