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Tata's purchase of Jaguar Land Rover looks a bargain

The British car industry had been in decline since the 1970s. Various incarnations of British Leyland, MG Rover and others had tried to make something of Britain's best marques but got nowhere fast. Then, in 2008, Indian company, Tata, bought Jaguar Land Rover (JLR) from Ford, for a sum of around £1.3 billion. The signs were not auspicious.

The British car industry had been in decline since the 1970s. Various incarnations of British Leyland, MG Rover and others had tried to make something of Britain's best marques but got nowhere fast. Then, in 2008, Indian company, Tata, bought Jaguar Land Rover (JLR) from Ford, for a sum of around £1.3 billion. The signs were not auspicious. Tata had little or no experience in the European car industry and even those with bags of experience, such as Ford and BMW, had already failed to make any real headway with JLR. Tata just made small, cheap cars, along with trucks, in India. Their British interests extended to tea company, Tetley and the steel company, Corus. Wise heads were shaken. Informed opinion had it that the Indians were in over their heads. They were doomed to fail.

That prediction, though, has singularly failed to materialise and last year's profits soared to £1.7 billion. That is substantially more than the entire purchase price Tata paid, returned in just a single year's profits. Unit sales have risen by 100,000 to a new record total of 360,000 and 80% of those are being exported. Tata has managed to confound the doomsayers and install a laid back but buccaneering approach to business at the firm, at the same time releasing a slew of desirable new models. The company has been self-financing ever since being bought over by Tata and jobs have been added just as quickly as profits have risen. The 1,700 jobs announced by JLR this month has brought the total to 9,000 new positions in the firm's three factories since the Tata takeover. That is boosted by an estimated 24,000 new jobs in the company's supply chain partners.

JLR is not resting on its laurels and is plotting daring new ventures. A joint arrangement with Chinese car group, Chery Automobile will see JLR cars being manufactured in China, its biggest market. A similar move is planned in Saudi Arabia, as the company invests some £2.75 billion in new products and research this year alone. The company is a major contributor to a renaissance in engineering in the West Midlands, the traditional home of the UK car industry. Professor David Bailey of Coventry University commented: "JLR has had an effect on the region but it's not just local, it's national."

The company has ambitions to double in size to take the likes of BMW and Audi head on. With a booming export market, overseas expansion and a much more benign labour relations environment, they just might pull it off.

 

 

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