Jaguar Land Rover has posted record annual profits of more than £1bn, capping a remarkable turnaround for one of Britain’s largest manufacturers.
Two years ago the luxury car maker attempted to seek Government support as global car sales collapsed, but yesterday reported that pre-tax profits had risen to £1.1bn in the year to March 31, up from £15m last year
The increase has been driven by a huge rise in Jaguar and Land Rover sales in China and emerging markets, where the middle classes see the British cars as status symbols.
“Jaguar Land Rover is now a strong, profitable and innovative competitor in the premium car industry,” said Carl-Peter Forster, chief executive of JLR’s parent company Tata Motors.
JLR employs 17,000 staff in the UK but is looking to take on at least another 1,000, with Tata investing £1bn a year to expand production and develop new models.
Indian company Tata bought JLR from Ford in 2008 for £1.1bn, but initially suffered heavy losses as the recession struck.
However, it has overseen investment in new vehicles and facilities – such as the Range Rover Evoque and Jaguar XJ – which have helped to drive the turnaround.
This helped JLR sales rise 26pc in the year from 193,982 to 243,621, including 190,628 Land Rovers. Sales in China rose by 43pc to 29,600. In financial terms, this meant JLR sales rose 51pc from £6.6bn to £9.9bn, with the company aided by favourable foreign exchange rates.
Ralf Speth, chief executive of JLR, said: “This is a solid performance but we must remain focused on delivering a strong, sustainable business model for the future. To that end, we have committed more than £1bn a year over the next five years to the creation of new and exciting products which will strengthen Jaguar Land Rover’s position in the global marketplace.”
Looking forward, Tata said it would target future growth in China, Russia, India and Brazil but warned “external geopolitical and economic factors” including exchange rates and growing raw material costs, could hinder volumes and profitability.
JLR’s growth in sales has led to Tata scrapping plans to close one of its three UK plants. The Indian company is now considering plans for a new engine plant in the UK, which could create 1,000 jobs, and a Chinese assembly base.
Mr Forster confirmed the company an engine plant was under consideration and a decision would be made “in the not to distant future”. Production at the plant will supplement JLR’s existing engine joint-venture with Ford as it seeks to expand.
Howard Wheeldon, senior strategist at BGC Partners and an automotive analyst, said: “The turnaround and success of Jaguar Land Rover in just two years should be seen as an object lesson by others, including Government, that the route to manufacturing success can only ever be through ongoing product and plant investment.
“The Government must, in my view, play a very much larger role in providing research and development incentives.”