IndoCarib
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Chinas roads dont suit fragile supercars.
Ferrari may have seen sales leap there thanks to the ******** of cash pouring from the coffers of the countrys estimated 1.4 million dollar-millionaires, but its British brands that are reaping the greatest benefits from their spending.
Chinese buyers, many of them factory owners who have made their fortune exporting consumer goods to the West, prefer the cachet and comfort of big, blue-blooded British luxury saloons, almost all of which will be chauffeur-driven through the countrys clogged streets.
Earlier this year, Rolls-Royce announced that China had become its single biggest market, overtaking the U.S. and the UK for the first time in more than a century of trading, while Bentleys sales in China and the U.S. are now evenly matched.
But each of these brands builds only a few thousand cars each year; the numbers at the Jaguar-Land Rover group are far more significant.
In the last year there has been a huge surge in demand for luxury SUVs like the Range Rover, a new generation of which launched on August 15. It is more luxurious, has two throne-like rear seats in the back and for the first time will come in a stretch model all to suit Chinese tastes.
In 2003, JLR sold just 431 cars in China. In the last financial year it sold an astonishing 51,000 there, up 76 per cent on the year before, and by the end of this year China is likely to overtake the United States as the firms biggest market.
This comes from a company that flirted with bankruptcy and begged for a bail-out from the Government as recently as three years ago before starting one of the most astonishing recoveries the car industry has ever seen.
These two genuinely iconic British brands have only recently been united, and Land Rover is comfortably the major partner in sales and profits.
Jaguar was founded as the Swallow Sidecar Company 90 years ago by Sir William Lyons and its first heyday came in the Fifties and Sixties, when its C- and D-Type racers were championed by heroes such as Stirling Moss and Mike Hawthorne.
On the road, the E-Type and XJ saloon set new standards for motoring grace.
But the company was swallowed by British Leyland in the late Sixties and later nationalised, suffering the same poor quality and lack of investment that killed many old British marques.
Privatised by Margaret Thatcher in 1984, it was bought by Ford in 1989.
The Americans proved to be generous but pushy and meddlesome parents.
Wanting Jaguar to be their rival for the fast-growing BMW and Audi marques, they created the smaller, cheaper Jaguar X-Type using the underpinnings of a Ford Mondeo.
The car wasnt well received, the growth plan failed and it was axed without a replacement in 2009. Jaguar bled money for almost all Fords two decades of ownership.
The first of Jaguars two major recent crisis points came in the autumn of 2007.
Ford, hit by slumping sales in its home market and desperate to avoid the bankruptcy that would later engulf its Detroit rivals, General Motors and Chrysler, was selling off almost all its foreign assets.
Volvo was sold to Chinese carmaker Geely, and Aston Martin to a private consortium. Jaguar was offered for sale with Land Rover, which Ford had bought from BMW in 2000.
Ford made mistakes, but towards the end it was finally getting it right, says motor industry expert Professor David Bailey of Coventry University.
Jaguar was just starting to turn a profit. But Ford had run out of money, and it wanted out.
'There were some great products in the pipeline, the result of some heavy Ford investment. Someone was going to pick it up cheaply.
The collapse of Lehman Brothers bank in 2008 had yet to hit, but the only serious interest came from five private equity firms and the Indian carmakers Tata and Mahindra.
At first the private equity firms were Fords preferred option, says a source.
Ford was sceptical about what Tata could bring to the deal. But the PE firms started to question whether JLR could survive outside a big automotive group, and afford to develop new models and hybrid powertrains and cope with new, tough, expensive government demands on safety and emissions.
That left the Indians as the only serious remaining bidders. If Tata hadnt been able to complete the deal, finally signed in June 2008, the consequences could have been disastrous.
If JLR had still been on sale when the financial crisis struck just a few months later, with spiralling losses and nobody with the cash to buy it, Ford might simply have closed it.
If it seems hard to imagine such a famous old name with 15,000 direct UK employees simply disappearing, remember that the recession killed Saab, which in 2007 made more than twice as many cars as Jaguar.
The whole Tata deal was incredibly romantic, says Max Warburton, the leading global automotive analyst.
I dont think there are many people inside Tata who understand why they bought JLR.
'The decision came from the absolute top of the company and from a guy who just loved the history of these British brands.
'Theres no operational synergy between Tata and JLR, and almost no technical co-operation between them.
'Only a romantic could be convinced that Jaguar could make money after such a long history of losing it.
The romantic was Ratan Tata, the then 70-year-old chairman of the extraordinary, impossibly diverse 150-year-old family business employing 420,000 people and spanning everything from tea to IT.
He had already overseen the acquisition of Tetley and Corus, formerly British Steel.
A petrolhead and a trained architect with an eye for design, he had established Tata as a car maker in 1991 and drove the development of the Tata Nano, the revolutionary ultra-low-cost £1,800 car with which he hopes to take millions of Indian families off overladen mopeds and reduce the countrys horrific road death toll.
He lives alone in a modest apartment in Mumbai with his two alsatians, Tito and Tango, and says his main aim in business is to be able to lay his head on his pillow at night knowing he has done no harm.
Ratan was an instant hit at Jaguar.
He has an incredibly noble presence and real charisma, says one former Jaguar insider.
He loves being in the design studio, looking at studies for future models, and particularly the new sports car.
'I remember sitting in one meeting where we just agreed a £100 million investment right there, and didnt have to go to America or anywhere else for approval. It felt incredibly liberating.
But Ratans romantic, £1.1 billion purchase of JLR soon looked spectacularly mistimed.
As the markets, banks and whole countries crashed, car sales plummeted and many premium makers were hit hardest. JLR sales slumped by a third and cost Tata an estimated £300 million in losses in its first year.
It was forced to negotiate with Business Secretary Peter Mandelson for access to Government loans and loan guarantees.
We went from winners to losers overnight, says a former senior JLR executive.
Things were just starting to come right when the crisis hit. It was about as tight as it gets at a car company. We were playing for time, doing everything we legitimately could to ease the cashflow, and we had a hard time meeting the payroll.
JLR was forced to make more than 2,000 workers redundant and planned to close one of its factories.
The negotiations with the Government dragged on so long that credit markets freed up before they could be completed, and in August 2009 Tata was able to raise more than £500 million for its ailing purchase, from private funds and the European Investment Bank.
And then, suddenly, JLR wasnt ailing any more.
After a £76 million loss in the first quarter of the 2009-10 financial year, the profit graph starts a relentless march upwards; losses cut to £28 million the next quarter, a profit of £50 million the quarter after, and six times that in the same quarter a year later.
In 2010-11, JLR made as much profit £1.1 billion as it cost Tata to buy just three years earlier, and around £400 million more in the year just ended. So what did Tata do to make JLR profitable in such unlikely conditions?
Not much, it seems.
Tata has focused ruthlessly on getting costs down, says Professor Bailey.
And theyve been very decisive in choosing the management. But once theyre in place, they leave them to get on with it, unlike Ford. Theyre long-term, committed, patient owners. All the things you want.
When Tata bought JLR the new-product pipeline was stuffed with world-beating new cars developed by JLR but paid for by Ford.
The good-looking, fine-handling Jaguar XF saloon launched in 2007 saved Jags sales from freefalling in the financial crisis.
The new, baby Range Rover, Evoque, went on sale last year and has been a colossal hit, selling more cars in its first nine months than Jaguar sold all year.
Better exchange rates have also helped JLR, which exports 80 per cent of its production.
But easily the biggest influence on JLRs recent success has been the insatiable demand for British luxury cars in China.
If you stripped out China, the JLR figures would look very different, says Warburton.
Theyd probably still be profitable, but they wouldnt look quite as exciting.
Sales in other emerging markets such as Brazil, Russia and India are up 39 per cent.
Despite the Eurozone crisis, sales there are up 27 per cent, and U.S. sales are up 15 per cent as that market slowly recovers. But by the end of this year, China is almost certain to overtake the U.S. and UK as JLRs biggest market.
The money JLR is making abroad is being spent here: it plans to open a new engine plant in Wolverhampton costing £355 million and creating 750 jobs; 10,000 jobs have been created across its three factories in the past two years; and when it advertised for 1,000 new workers to meet demand for the Evoque at the Halewood plant on Merseyside, 35,000 people applied.
This month, the plant went into 24-hour production to meet demand. JLR is investing £2 billion each year to create 40 new or revised products in the next five years.
Although Tata benefited from Fords R&D, numerous other projects such as the F-Type two-seater, to be revealed at next months Paris motor show were initiated under Tata.
So have Jaguar and Land Rover finally been relieved of their permanent air of financial danger?
Not quite. A shift in exchange rates or further tightening of emissions legislation could hit JLR hard.
And even a cursory look at the accounts shows that its Land Rover making all the running: Jaguar sales actually fell in the UK, Europe and North America in the year to the end of March.
Only China allowed it to post a five per cent gain to 54,000 cars, still a long way from its peak of 126,000 under Ford, or the 100,000 most analysts think it needs to work without Land Rovers support.
But new cars are on the way: the F-Type, the XF Sportbrake estate, and a new, still secret, smaller crossover model that is predicted will become Jags biggest seller.
Whats more, says one JLR board member, under Tata we have a nimbleness we lacked under Ford. We can react faster.
Only three years ago, Ratan Tata would have been pleased just to find JLR still in business now. Instead, he finds his new firm in top gear, even building a radical, £700,000 hybrid supercar to celebrate a staggering £1.5 billion profit on a turnover of £13.5 billion.
Tata has done an exceptional job with JLR so far, says Max Warburton.
Plenty of Western car-makers ran the rule over the business when it was for sale a few years ago and decided it wasnt a good deal.
'They must be kicking themselves now.
Read more: Jaguar Land Rover: Made in Britain. Saved in India. Craved in China: How the group was saved...by Indian cash and Chinese drivers | Mail Online
Ferrari may have seen sales leap there thanks to the ******** of cash pouring from the coffers of the countrys estimated 1.4 million dollar-millionaires, but its British brands that are reaping the greatest benefits from their spending.
Chinese buyers, many of them factory owners who have made their fortune exporting consumer goods to the West, prefer the cachet and comfort of big, blue-blooded British luxury saloons, almost all of which will be chauffeur-driven through the countrys clogged streets.
Earlier this year, Rolls-Royce announced that China had become its single biggest market, overtaking the U.S. and the UK for the first time in more than a century of trading, while Bentleys sales in China and the U.S. are now evenly matched.
But each of these brands builds only a few thousand cars each year; the numbers at the Jaguar-Land Rover group are far more significant.
In the last year there has been a huge surge in demand for luxury SUVs like the Range Rover, a new generation of which launched on August 15. It is more luxurious, has two throne-like rear seats in the back and for the first time will come in a stretch model all to suit Chinese tastes.
In 2003, JLR sold just 431 cars in China. In the last financial year it sold an astonishing 51,000 there, up 76 per cent on the year before, and by the end of this year China is likely to overtake the United States as the firms biggest market.
This comes from a company that flirted with bankruptcy and begged for a bail-out from the Government as recently as three years ago before starting one of the most astonishing recoveries the car industry has ever seen.
These two genuinely iconic British brands have only recently been united, and Land Rover is comfortably the major partner in sales and profits.
Jaguar was founded as the Swallow Sidecar Company 90 years ago by Sir William Lyons and its first heyday came in the Fifties and Sixties, when its C- and D-Type racers were championed by heroes such as Stirling Moss and Mike Hawthorne.
On the road, the E-Type and XJ saloon set new standards for motoring grace.
But the company was swallowed by British Leyland in the late Sixties and later nationalised, suffering the same poor quality and lack of investment that killed many old British marques.
Privatised by Margaret Thatcher in 1984, it was bought by Ford in 1989.
The Americans proved to be generous but pushy and meddlesome parents.
Wanting Jaguar to be their rival for the fast-growing BMW and Audi marques, they created the smaller, cheaper Jaguar X-Type using the underpinnings of a Ford Mondeo.
The car wasnt well received, the growth plan failed and it was axed without a replacement in 2009. Jaguar bled money for almost all Fords two decades of ownership.
The first of Jaguars two major recent crisis points came in the autumn of 2007.
Ford, hit by slumping sales in its home market and desperate to avoid the bankruptcy that would later engulf its Detroit rivals, General Motors and Chrysler, was selling off almost all its foreign assets.
Volvo was sold to Chinese carmaker Geely, and Aston Martin to a private consortium. Jaguar was offered for sale with Land Rover, which Ford had bought from BMW in 2000.
Ford made mistakes, but towards the end it was finally getting it right, says motor industry expert Professor David Bailey of Coventry University.
Jaguar was just starting to turn a profit. But Ford had run out of money, and it wanted out.
'There were some great products in the pipeline, the result of some heavy Ford investment. Someone was going to pick it up cheaply.
The collapse of Lehman Brothers bank in 2008 had yet to hit, but the only serious interest came from five private equity firms and the Indian carmakers Tata and Mahindra.
At first the private equity firms were Fords preferred option, says a source.
Ford was sceptical about what Tata could bring to the deal. But the PE firms started to question whether JLR could survive outside a big automotive group, and afford to develop new models and hybrid powertrains and cope with new, tough, expensive government demands on safety and emissions.
That left the Indians as the only serious remaining bidders. If Tata hadnt been able to complete the deal, finally signed in June 2008, the consequences could have been disastrous.
If JLR had still been on sale when the financial crisis struck just a few months later, with spiralling losses and nobody with the cash to buy it, Ford might simply have closed it.
If it seems hard to imagine such a famous old name with 15,000 direct UK employees simply disappearing, remember that the recession killed Saab, which in 2007 made more than twice as many cars as Jaguar.
The whole Tata deal was incredibly romantic, says Max Warburton, the leading global automotive analyst.
I dont think there are many people inside Tata who understand why they bought JLR.
'The decision came from the absolute top of the company and from a guy who just loved the history of these British brands.
'Theres no operational synergy between Tata and JLR, and almost no technical co-operation between them.
'Only a romantic could be convinced that Jaguar could make money after such a long history of losing it.
The romantic was Ratan Tata, the then 70-year-old chairman of the extraordinary, impossibly diverse 150-year-old family business employing 420,000 people and spanning everything from tea to IT.
He had already overseen the acquisition of Tetley and Corus, formerly British Steel.
A petrolhead and a trained architect with an eye for design, he had established Tata as a car maker in 1991 and drove the development of the Tata Nano, the revolutionary ultra-low-cost £1,800 car with which he hopes to take millions of Indian families off overladen mopeds and reduce the countrys horrific road death toll.
He lives alone in a modest apartment in Mumbai with his two alsatians, Tito and Tango, and says his main aim in business is to be able to lay his head on his pillow at night knowing he has done no harm.
Ratan was an instant hit at Jaguar.
He has an incredibly noble presence and real charisma, says one former Jaguar insider.
He loves being in the design studio, looking at studies for future models, and particularly the new sports car.
'I remember sitting in one meeting where we just agreed a £100 million investment right there, and didnt have to go to America or anywhere else for approval. It felt incredibly liberating.
But Ratans romantic, £1.1 billion purchase of JLR soon looked spectacularly mistimed.
As the markets, banks and whole countries crashed, car sales plummeted and many premium makers were hit hardest. JLR sales slumped by a third and cost Tata an estimated £300 million in losses in its first year.
It was forced to negotiate with Business Secretary Peter Mandelson for access to Government loans and loan guarantees.
We went from winners to losers overnight, says a former senior JLR executive.
Things were just starting to come right when the crisis hit. It was about as tight as it gets at a car company. We were playing for time, doing everything we legitimately could to ease the cashflow, and we had a hard time meeting the payroll.
JLR was forced to make more than 2,000 workers redundant and planned to close one of its factories.
The negotiations with the Government dragged on so long that credit markets freed up before they could be completed, and in August 2009 Tata was able to raise more than £500 million for its ailing purchase, from private funds and the European Investment Bank.
And then, suddenly, JLR wasnt ailing any more.
After a £76 million loss in the first quarter of the 2009-10 financial year, the profit graph starts a relentless march upwards; losses cut to £28 million the next quarter, a profit of £50 million the quarter after, and six times that in the same quarter a year later.
In 2010-11, JLR made as much profit £1.1 billion as it cost Tata to buy just three years earlier, and around £400 million more in the year just ended. So what did Tata do to make JLR profitable in such unlikely conditions?
Not much, it seems.
Tata has focused ruthlessly on getting costs down, says Professor Bailey.
And theyve been very decisive in choosing the management. But once theyre in place, they leave them to get on with it, unlike Ford. Theyre long-term, committed, patient owners. All the things you want.
When Tata bought JLR the new-product pipeline was stuffed with world-beating new cars developed by JLR but paid for by Ford.
The good-looking, fine-handling Jaguar XF saloon launched in 2007 saved Jags sales from freefalling in the financial crisis.
The new, baby Range Rover, Evoque, went on sale last year and has been a colossal hit, selling more cars in its first nine months than Jaguar sold all year.
Better exchange rates have also helped JLR, which exports 80 per cent of its production.
But easily the biggest influence on JLRs recent success has been the insatiable demand for British luxury cars in China.
If you stripped out China, the JLR figures would look very different, says Warburton.
Theyd probably still be profitable, but they wouldnt look quite as exciting.
Sales in other emerging markets such as Brazil, Russia and India are up 39 per cent.
Despite the Eurozone crisis, sales there are up 27 per cent, and U.S. sales are up 15 per cent as that market slowly recovers. But by the end of this year, China is almost certain to overtake the U.S. and UK as JLRs biggest market.
The money JLR is making abroad is being spent here: it plans to open a new engine plant in Wolverhampton costing £355 million and creating 750 jobs; 10,000 jobs have been created across its three factories in the past two years; and when it advertised for 1,000 new workers to meet demand for the Evoque at the Halewood plant on Merseyside, 35,000 people applied.
This month, the plant went into 24-hour production to meet demand. JLR is investing £2 billion each year to create 40 new or revised products in the next five years.
Although Tata benefited from Fords R&D, numerous other projects such as the F-Type two-seater, to be revealed at next months Paris motor show were initiated under Tata.
So have Jaguar and Land Rover finally been relieved of their permanent air of financial danger?
Not quite. A shift in exchange rates or further tightening of emissions legislation could hit JLR hard.
And even a cursory look at the accounts shows that its Land Rover making all the running: Jaguar sales actually fell in the UK, Europe and North America in the year to the end of March.
Only China allowed it to post a five per cent gain to 54,000 cars, still a long way from its peak of 126,000 under Ford, or the 100,000 most analysts think it needs to work without Land Rovers support.
But new cars are on the way: the F-Type, the XF Sportbrake estate, and a new, still secret, smaller crossover model that is predicted will become Jags biggest seller.
Whats more, says one JLR board member, under Tata we have a nimbleness we lacked under Ford. We can react faster.
Only three years ago, Ratan Tata would have been pleased just to find JLR still in business now. Instead, he finds his new firm in top gear, even building a radical, £700,000 hybrid supercar to celebrate a staggering £1.5 billion profit on a turnover of £13.5 billion.
Tata has done an exceptional job with JLR so far, says Max Warburton.
Plenty of Western car-makers ran the rule over the business when it was for sale a few years ago and decided it wasnt a good deal.
'They must be kicking themselves now.
Read more: Jaguar Land Rover: Made in Britain. Saved in India. Craved in China: How the group was saved...by Indian cash and Chinese drivers | Mail Online
