London - When Jaguar staged the global launch of its vitally important XE sports saloon earlier this month it did so in spectacular style – with a car suspended beneath a helicopter soaring across London.
Such is the success of Jaguar Land Rover (JLR) in the fortunes of its debt-laden Indian parent company Tata Motors, that speculation has been rife for months that it may be preparing to float all or part of its rapidly expanding British empire with a separate Stock Exchange listing.
JLR’s rapid acceleration – with new car models, niches and engines leading to pre-tax profits of nearly £1 billion (R18.2 billion) for the first three months of this year – is only adding fuel to such thoughts.
Executives are clear that the new medium-sized XE Jaguar family car – a British competitor to German rival BMW’s best-selling 3-Series – marked a tipping point in the fortunes and future of the UK company.
RECORD SALES ANTICIPATED
The XE will double production of Jaguar cars and propel total production to record highs well beyond half a million.
Some experts have described JLR’s re-entry into the highly competitive compact family car market as “betting the house” on the move. However chief executive Dr Ralf Speth is a former BMW boss, so knows what he is up against.
By any measure it has been a remarkable turnaround for the legendary UK car firm.
When the fag-end of the last Labour Government declined to help Tata kick-start a revival of Jaguar Land Rover – amid high expectation that they would thus be forced to shut down factories and axe workers – the Indian business bosses instead pumped in billions of their own cash, built more factories, expanded the ones they already had, and took on thousands more employees.
It was a huge gamble. But so far it has paid off handsomely, with JLR contributing around 95 percent of its Indian parent’s profits. Tata has a market capitalisation on the Bombay stock exchange of around £17bn. But Dr Speth won’t be drawn on talk of possible flotations.
Speak to Tata, he says, adding: “I’m the wrong guy to talk to.”
NERVE-RACKING JOURNEY
But he admits it’s been an exciting if nerve-racking journey: “We’ve come a long way since Tata bought our company on the second of June, 2008. We were virtually bankrupt. But since then we’ve tripled turnover and doubled production.”
Tata is committing £3.5bn this year towards a spending programme to deliver 50 new vehicle variations by 2020. The XE investment alone is £2bn.
Last year Jaguar Land Rover made a record pre-tax profit of £2.5bn on revenues of nearly £20bn. Pre-tax profits for the first quarter of 2014 were up 22pc to £925m, on the back of revenues up 31pc to £5.35bn.
Jaguar Land Rover bosses stress that the glitzy launch of the new ‘baby’ XE in Britain – rather than at next month’s Paris Motor Show – was a sign of the firm’s growing confidence and ambition, and was a ‘significant’ leap forward in terms of investment and expansion.
Dr Speth said: “The Jaguar XE is a vehicle at the very heart of the UK’s manufacturing renaissance. We’ve developed this car from scratch. We’ve invested £2bn, built two new factories [at Wolverhampton and Solihull] and created 2300 new jobs. It is a commitment to the UK.”
AMBITIOUS PLANS
It will take JLR production from more than 425 000 vehicles last year – a rise of 19pc – to well beyond half a million a year.
But there are also ambitious plans to build the car in China, India and Saudi Arabia, although Dr Speth dislikes revealing numbers, and deflects all enquiries.
As part of the VIP launch offensive rumoured to have cost around £4m, the ‘baby’ Jaguar was given its star-studded world premiere at London’s Earls Court, with performances from Emeli Sande, the Kaiser Chiefs and Eliza Doolittle.
After the Paris Motor Show, JLR will be the main automotive sponsor at the UK national media’s prestigious 10th anniversary London Press Club Ball in aid of the Journalists’ Charity, whose patron is the Queen.
Despite the Jaguar XE launch happening on the same day that the Duchess of Cambridge announced she was pregnant, Jaguar’s new arrival still made the headlines. “Clearly this was a great day to announce new babies,” said Dr Speth.
Daily Mail