Photo: Photo Courtesy of Jaguar
Jaguar Land Rover, a business that was battling for survival three years ago, has reported record annual sales and a 35% increase in pre-tax profits to £1.5bn ($2.35 billion) on the back of booming business in China.JLR’s Indian owner, the Tata conglomerate, sought a government-guaranteed loan in 2009 and was considering the closure of a plant with the loss of thousands of jobs. However, those plans were abandoned as demand from emerging economies led by China and Russia saw the business come roaring back to health.
JLR revealed on Tuesday that it sold 314,433 cars in the year to 31 March – an increase of 29% on last year – with the Range Rover Sport its biggest seller, followed by the recently launched Range Rover Evoque. The best-selling Jaguar model was the Jaguar XF.
Ralf Speth, JLR’s chief executive, said: “The announcement of JLR’s financial results is a positive reflection of the continued level of consumer confidence in both of our brands. These record earnings, driven by strong product demand and operating efficiencies, give JLR the financial impetus to sustain its ongoing investment programme.”
The results crown another successful month for a UK car manufacturing industry that is overwhelmingly foreign-owned and undergoing an investment boom. On top of production announcements by Nissan, Toyota, BMW and JLR, General Motors announced a fortnight ago it would preserve the Vauxhall plant in Ellesmere Port, saving 2,100 jobs and adding 700 more. Boosted by demand from emerging economies for luxury brands, the British car industry produced 1.34m vehicles last year – an increase of nearly 6% on 2010. While sales of Bentleys, Minis and Ranger Rovers have grown, so has demand for mass-market vehicles such as the Nissan Qashqai, made at Britain’s largest car factory in Sunderland.
China remains a source of exponential growth for JLR, recording a 76% leap in sales to more than 50,000 vehicles, JLR’s third largest market. Russia was its fourth biggest, growing by 38% to more than 16,000 vehicles. The UK is still JLR’s biggest market, but was the slowest grower among the top five countries, increasing sales by 3% to 60,000 vehicles, followed by a resurgent US which recorded a 15% increase to 58,000.
Mark Fulthorpe, an analyst at IHS, said the Range Rover and Land Rover brands were outperforming competitors in old and new markets. “These are positive signs because they are growing their presence in emerging markets and they are proving to have a sustainable business for their vehicles in some of their mature markets.”
Tata bought JLR from Ford in 2008 for a reported $2.3bn and was soon locked in negotiations with the Labour government over a AAA-rated loan guarantee as the credit crunch hit western Europe. At one stage the company considered closing one of its production sites in Solihull or Castle Bromwich in Birmingham, but abandoned those plans and also stepped back from seeking state assistance.
Since then it has announced a series of hefty investments in the UK, including plans to build the new F-type Jaguar convertible at Castle Bromwich, constructing a new engine plant in Wolverhampton with 750 staff and adding 1,000 jobs at the Solihull factory, where it produces the Range Rover, Range Rover Sport, and the Land Rover Discovery and Defender. The Evoque is produced at JLR’s Halewood plant in Liverpool, which recently confirmed plans to hire a further 1,000 workers. Jaguar employs 20,000 people in the UK.
Roger Maddison, national officer of the Unite union, said JLR’s success was “a testament to the hard work and sacrifices of its UK workforce”. He added: “During the 2008 credit crunch the workers agreed to £70 million of savings to support the company through the downturn.”
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