Motors Ltd. has secured the funding necessary to finance its future operations, including the upcoming launches of the new Jaguar XJ and the Land Rover LR4.
The India-based auto maker, which last year acquired JLR fromMotor Co. for $2.3 billion, had been seeking £500 million ($826 million) from the British government. However, the company recently received £175 million ($289 million) in private-sector funding, negating the need for government aid.
Nevertheless,still is pursuing a £340 million ($562 million) loan from the European Investment Bank, which has been offered but not guaranteed, JLR spokesman Stuart Schorr tells Ward’s.
In a statement, Tata says the private funding is a “positive sign for our business” and demonstrates (the strength) in our future business plans.”
U.K. Business Secretary Peter Mandelson says the British government “welcomes news that Tata has secured private-sector funding” for JLR. “The government had offered bridging financing from the Automotive Assistance Program if necessary,” he says in a statement, referring to the U.K.’s auto industry investment program.
“We understand the Tata group will now be successful in resolving longer-term financial needs, but we are willing to help again if necessary.”
JLR plans to launch the ’10 Land Rover LR4 this year, a replacement for the outgoing LR3, which boasts a new 5.0L V-8 developing 375 hp and 375 lb.-ft. (508 Nm) of torque. The LR4 is scheduled to bow Sept.1 in both the U.S. and U.K.
The new ’10 Jaguar XJ, which represents a radical design departure from the outgoing model, will debut in early 2010. The car will be available in the U.S. with a choice of three engines: a 5.0L 385-hp naturally aspirated V-8; 5.0L 470-hp supercharged V-8; and 5.0L 510-hp supercharged V-8.
Despite the acquisition of the private loans, the (global) economic environment “is still very challenging” and will “continue to be for some time,” Tata says in a statement.
“We have been forced to take unprecedented actions through this tough economic crisis,” and “we will continue to take further actions to secure the future of the business.”
JLR employees agreed in March to a reduced workweek and pay freeze in order to save jobs. Workers at six U.K. sites voted overwhelmingly in favor of the proposal recommended by their unions, as well as GMB and Unite the Union, two of the largest general trade unions in the region.
Under conditions of the proposal, the workweek at the plants was cut to four days and pay was frozen for one year.
JLR has been particularly hard hit by the ongoing global recession. In July, Tata reported Jaguar’s global sales fell 20% in the October 2008-March 2009 time period, from year-ago, while Land Rover deliveries plummeted 51%.
To mitigate its losses, Tata is seeking the advice of international firms KPMG Consulting LLC and Roland Berger Strategy Consultants on ways to cut costs and reduce complexities at JLR.
“The consultants have been working on this for over two months,” Tata Managing Director Ravi Kant is quoted as saying in media reports.
Tata says it has located a low-cost source of high-quality components from India that can be used for high-end JLR models. It also has identified opportunities for synergies between Tata and JLR plants and the potential to integrate some engineering and design capabilities.
In Tata’s annual 2009 report, Chairman Ratan Tata says Tata Motors has “recognized the high level of technology and skills embedded in JLR, which could be of great value to both companies.”
One such technology under development includes a new hybrid-electric powertrain that Tata plans to introduce on future models, although details have yet to be released.
The auto maker also intends to construct all future models with lightweight aluminum bodies, resulting in considerable savings in weight, fuel consumption and carbon-dioxide emissions.
– with Sudhakar Shah in Mumbai