labels: Cars
China bails out JLR with 600-million order news
28 February 2009

The British luxury car maker, Jaguar Land Rover owned by Tata Motors has been bailed out, not by the UK government, but by China as a Chinese trade delegation to Europe signed a life-saving deal worth 600 million to purchase13,000 vehicles from JLR over the next three years.

 Jaguar Land Rover Cash-strapped JLR, bought out by Tata Motors in 2008 from Ford before the onset of the rapid eceonomic slowdown, will supply 10,000 Land Rovers' Freelander 2 4x4s and 3,000 Jaguars including the Jaguar X-Type cars and over a three-year period.

The important deal comes at a time when the entire UK car industry, especially luxury car maker JLR has been lowering production and introducing redundancies in response to the sharp decline in car sales due to the drying up of bank loans.

The importance of the Chinese order was spelt out by Jaguar, which said that it was "a very significant" order that comes at "this challenging time."

The news has lifted the sagging morale of the employees at the company, which employs thousands of workers in the UK. It could lso affect a vote on a proposal aimed at no job cuts for two years in exchange for one-year pay freeze, increased pension contributions and a four-day week.

A significant number of these 13,000 vehicles will be sold by dealers to individual Chinese buyers. From no sales in the country, the UK company in the recent past has been making steady inroads into the Chinese market, which has now become JLR's fifth biggest in three years.

Last year JLR sold 2,000 Jaguars and 11,000 Land Rovers. With the present order the maker of the iconic British brands can hope to ride out the turmoil for the next three years till the economy heals itself.

Last year, JLR had cut 850 jobs and was looking for employees to opt for a voluntary redundancy scheme aimed at saving approximately 70 million a year.

However, exports have kept the company going; out of the cars made last month, exports accounted for a record 83.5 per cent.

SMMT data shows that about 61,404 cars were produced in the UK in January 2009, down by 58.7 per cent compared to January 2008. Out of this only 10,132 cars were for the domestic market -  a decline of 72.3 per cent - while the rest were for exports. Commercial vehicle production  at 8,351 registered a 59.9-per cent fall from January 2008.

Last month, the UK government had unveiled a 2.3-billion loan guarantees to car makers in the UK in order to protect 200,000 people employed directly by automakers and a another 640,000 indirectly (See: Britain unveils 2.3 billion loan for car industry)

The amount is far lower than the 13 billion asked for by labour union Unite, which called the 2.3-billion guarantees "a massive dissappointment; as the UK has 27 car and commercial vehicle manufacturers in the UK who produce 1.75 million cars and commercial vehicles each year, the UK auto industry has a combined annual turnover of 51 billion. The car industry had reacted saying tha aid would be useless as it would take a long time in coming and in between that time, many car manufacturers and suppliers are likely to wind up.

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China bails out JLR with 600-million order