News digest
Compiled by Clive Goldthorp
1) SAIC Motor/MG and Roewe
MG Sales Hurt by SAIC Personnel Changes
China Morning Post, 22nd September, 2008
The sales of MG-branded cars have been badly hurt by the personnel changes at
Nanjing Automobile (Group) Corp.
Statistics show that MG's monthly sales volume during the first
five months of this year was not more than 400, compared with monthly sales
of about 800 units from September to December 2007. It is the frequent personnel
changes Shanghai Automotive Industry Corp. (Group) (SAIC) launched in senior
management of Nanjing Automobile that leads to the poor sales of MG, pointed
out industry experts.
SAIC, parent of Shanghai-traded SAIC Motor Corp. Ltd. (SHSE: 600104),
inked a contract to acquire Nanjing Automobile from Yuejin Motor (Group) Corp.
at the end of December 2007. After the deal, SAIC launched a series of personnel
changes on the senior management team of Nanjing Automobile.
It appointed Huang Keji, a top executive with Shanghai GM Dong
Yue Motors Co., Ltd., as the general manager of MG in February this year. He
was asked to take charge of the production and product quality at MG and Zhang
Xin, a top executive with Nanjing Automobile, was asked to be responsible for
the sales at MG.
SAIC did not make many adjustments on the marketing team of MG
so as to stabilize the latter's sales network in the country.
However, Zhang Xin resigned and then joined in Beijing Automobile.
Sun Weijian, also a senior executive with Nanjing Automobile, resigned and then
jointed in Chery Automobile Co., Ltd., one of the biggest homegrown automakers
in China. Those resignations directly led to the poor sales of MG 7 series cars.
In order to change the dropped sales, SAIC nominated Xue Zhenghua, a top executive
responsible for marketing at Shanghai Volkswagen Co., Ltd., as the executive
assistant to the general manager of MG. However, the management change disappointed
everyone as not much improvement was seen in MG's sales volume.
Actually, the fusion of the management team of Nanjing Automobile
and SAIC did not go smoothly, revealed people close to the deal. Many positions
at MG are seated by two persons. Notably, the quality system of Nanjing Automobile
is different from that of SAIC, which therefore delays the rollout of MG new
car models. SAIC will make adjustments on the marketing team of MG provided
that there is no breakthrough in MG's sales.
2) Jaguar and Land Rover
Tata reports strong start for Jaguar Land Rover at Halewood
Alistair Houghton, Liverpool Echo 24th September, 2008
JAGUAR Land Rover’s owner Tata Motors says the company has
had a strong start to the year despite reporting a six-month loss.
Tata said JLR, which employs 2,000 people at its Halewood manufacturing
plant, posted a bumper £372m operating profit in the first half of the
year, following a £351m operating profit in 2007, but said accounting
adjustments meant the group reported an overall loss of £207m after tax.
It follows years in which JLR failed to make a profit for previous
owner Ford. This is the first time JLR’s figures have been made available
separately, as they were previously part of Ford’s Premier Automotive
Group division which also included Volvo. Indian giant Tata has again warned
that conditions in coming months will be tough for JLR – and says its
company’s plans to sell more new cars in Asian markets may not be enough
to offset sales slumps in key markets hit by the credit crunch.
Tata has issued a prospectus for a new share issue that it hopes
will raise £487m towards some of the costs of its acquisition of JLR.
The prospectus shows that for the six months to June 30, JLR made an operating
profit on revenues of £4.5bn. It reported a loss after tax and other adjustments,
but a JLR spokesman said that reflected accounting adjustments made by Ford
including a £492m payment on deferred tax and debts.
Tata completed its £1bn-plus takeover of JLR in June. Days
later Ratan Tata, the company’s chairman and one of India’s richest
men, visited Halewood to mark what plant managers described as an “exciting
new era” for the factory. Halewood produces Land Rover’s Freelander
2 and Jaguar’s X-Type car. The Freelander 2 has been a huge hit for Land
Rover. Last year it saw worldwide sales of 65,363, including UK sales of almost
19,000.
Land Rover has enjoyed three successive years of record sales,
with 2007 marking the first time the brand had sold more than 200,000 vehicles
a year. But it has already warned that sales would fall as the credit crunch
bites in its key UK and US markets. Both Jaguar and Land Rover are looking to
increase sales in new markets, such as India and Russia, to make up for falling
sales in the West.
But in Tata’s prospectus yesterday the company said: “Consumer
decisions as to whether and when to make a vehicle purchase may be affected
significantly by general economic conditions, including the cost of purchasing
and operating a vehicle and the availability and cost of credit and fuel. “In
view of recent high crude oil prices and weak economic conditions in certain
large auto markets such as the US and Europe, many markets are witnessing or
are likely to witness steep demand contraction.
“Jaguar Land Rover’s strategy which consists of new
product launches and expansion into growing markets such as China and Russia
may not be sufficient to mitigate the decrease in demand for Jaguar Land Rover’s
products in established markets, which could have a significant adverse impact
on Jaguar Land Rover’s (and consequently the company’s) financial
performance.”
Land Rover is developing new vehicles and new technologies to meet
growing demand for more environmentally-friendly and fuel-efficient vehicles.
Its small LRX “concept car”, which can run on a hybrid engine and
use bio-diesel, has been well-received by analysts and motoring journalists
and is likely to be built at Halewood if it goes into production.
Jaguar and Land Rover post $383m loss
Rhys Blakely, The Times 24th September, 2008
Jaguar and Land Rover recorded a loss of $383 million after tax
in the first six months of the year, according to a rights issue prospectus
filed by Tata Motors. The Indian company bought the luxury marques earlier this
year from Ford for $1.15 billion.
The detail of just how much money the two carmakers are loosing
will cement concerns that Tata, India's largest truck maker, will have its work
cut out in making its first foray into the luxury car market a success. A spokesman
for Tata said that the loss detailed in the most recent accounts for Land Rover
and Jaguar did not give the best picture of the units' performance.
It pointed to figures showing that the earnings before interest
and tax of the two carmakers combined was $688 million in the six months to
the end of June. Tata's purchase of Land Rover and Jaguar has, however, already
faced several serious hurdles. Last month, Tata Motors was forced to scrap a
planned 30 billion rupee (£352 million) rights issue that was to help
finance the group's acquisition of Land Rover and Jaguar.
It cancelled the convertible preference share issue after its share
price plummeted. It now intends to sell assets instead to raise the cash, which
is needed to refinance an expensive bridge loan. However, plans for two other
rights issues to raise a further 42 billion rupees remain intact. The prospectus
for those issues, from the Indian bank JM Financial, contained the breakdown
of Jaguar and Land Rover's performance.
Meanwhile, sales of Land Rovers are sharply down in important markets,
such as the US, in the wake of the sub-prime crisis. There are also concerns
that the surging costs of raw materials may scramble Tata's plans to reap profits
from its 1,250 Nano, which will be the world's cheapest car when it goes on
sale this autumn in India.
The construction of the factory being built to produce the Nano
has ground to a halt after being besieged by thousands of demonstrators.
Jaguar Land Rover names new president of U.S. unit
Chrissie Thompson, Automotive News Europe 25th September, 2008
Gary Temple will serve as the next North American president of
Jaguar Land Rover America, the company said Wednesday in a statement. Temple,
65, a 25-year veteran of the company, most recently served as senior executive
vice president of operations for North America. As continent president, he will
oversee North American sales, marketing and service operations for the company,
currently based in Irvine, California.
The U.S. unit, acquired by Tata Motors June 2 from Ford Motor,
is in the process of moving its headquarters to New Jersey. Temple's appointment
was effective immediately. He replaces Mike O'Driscoll, who recently became
the managing director of Jaguar Cars.
Jaguar Land Rover to close Halewood plant for a week
Duncan Tift, Birmingham Post 26th September, 2008
Luxury carmaker Jaguar Land Rover will close its plant in Merseyside
for a week due to falling demand. The company announced the Halewood factory
would be shut from October 27-31, although staff will continue to be paid.
The shutdown is the latest round of production cuts to be announced
by the firm in the past few weeks. Falling demand has already led to cutbacks
at the company’s sites in Castle Bromwich and Solihull. The situation
creates a gloomy picture for the company as it prepares for one of the biggest
dates in the European automotive calendar – the Paris Motor Show, which
starts next week.
However, the firm is not the only one under a cloud. Bentley has
recently announced similar cutbacks while Toyota has scaled down its global
production estimates, based on poor sales in the vital United States market.
JLR said yesterday that it would use the Halewood closure to evaluate its production
in line with the current slump in demand.
“This is half-term holiday week and, traditionally, this
has always been a week when production ceased at Castle Bromwich and Solihull,
although not at Halewood. The halt in production is to try to match production
to demand,” said a JLR spokesman yesterday."
It has ruled out speculation that a complete shift could be axed
next year. The former Ford plant, which employs around 2500 people, builds the
Jaguar X-type saloon and the Land Rover Freelander. Jaguar announced last week
that it was easing output at its Castle Bromwich plant, while Land Rover said
last month that it had axed a night shift at its Lode Lane factory in Solihull
and was putting some models on a four-day week production cycle.
While the latest move is a blow, it is not unexpected. Speculation
about the fate of operations on Merseyside had begun as soon as the first announcement
of cutbacks had been made. Despite the economic downturn however, the company
has yet to announce redundancies. Skilled workers are hard to find and with
demand for the award-winning Jaguar XF still relatively good, the company will
want to make hay for as long as it can.
However, there is another factor which cannot be ignored and that
is demand for the vehicles in the emerging markets. Both Jaguar and Land Rover
are forging new markets in Russia and China. Land Rover, despite reduced demand
in its established markets to the UK and the United States, still sells into
around 160 markets around the globe – even if some only take very small
numbers.
However, if they are combined, they go a long way toward offsetting
falling sales elsewhere. Nevertheless, Tata, which acquired the luxury brands
earlier this year in a £1.15 billion deal with Ford, will be unhappy.
It is having to make the announcements just as it is encountering difficulties
with its domestic operation. It was due to launch its much anticipated Nano
microcar – billed as the world’s cheapest car – next month
but the production has been beset by problems after farmers angry about not
being compensated for land swallowed up by a new factory staged a series of
protests against the firm.
It is now switching production to its other plants in India to
try and avert further delays.
Land Rover night shift on hold until next year
Duncan Tift, Manufacturing Correspondent, Birmingham Post 26th September, 2008
The axed night shift at Land Rover’s Solihull plant is unlikely
to be reinstated before the end of the year at the earliest, the company has
said. The announcement is the latest move in a series of production cutbacks
to afflict the luxury carmarker and came just 24 hours after firm revealed it
was shutting its plant in Halewood on Merseyside for a week at the end of October
to help ease over-supply.
Jaguar Land Rover, now owned by India’s Tata Motors, said
at the end of last month that from the beginning of October production of the
Range Rover would be reduced from two shifts to one. The company has not said
by how many units a week production is being cut. Staff who work on the two
shifts will either work on day assembly or be redeployed on completing partially
assembled vehicles, training or track maintenance work.
There has been speculation amongst the company’s 13,000-strong
staff that redundancies can now not be far away. Despite the fears, the company
has not made anyone redundant although it has said this cannot ever be guaranteed.
Company spokesman Mark Foster, who confirmed that there were no plans to reinstate
the shift in the immediate future, said: “No manufacturer at any time,
let alone the period we’re going through at the moment, can give a guarantee
on job numbers.”
Workers at the Lode Lane plant said they had never known the situation
to be as bad as it is now. In addition to the Halewood closure, Jaguar announced
last week that it was easing output at its Castle Bromwich plant. The Merseyside
plant, which employs around 2,500 people, builds the Jaguar X-type saloon and
the Land Rover Freelander.
The situation is not one the company would have chosen for itself
just days before it goes under the spotlight at the Paris Motor Show. It will
be hoping the exhibition can give fresh impetus to its popular and awarding-winning
XF saloon as well as its luxury 4x4 models. The latter have been especially
badly hit by declining sales in the United States and Europe although demand
for them in the emerging markets of China and Russia continues to grow.
Meanwhile, parent company Tata Motors is said to be in talks with
private equity funds to sell up to 25 per cent each in six unlisted units. Reports
in India said the country’s largest automaker planned to raise around
£350 million from sales of stakes in subsidiaries including Tata Daewoo
Commercial Vehicle, HV Transmissions, Tata Motors Finance, Tata Technologies
and Telco Construction Equipment.
Tata has declined to comment on the situation, other than to say
it had already announced its intention to review its investment portfolio and
pursue a programme of “monetising certain investments over the coming
quarters”. It is believed that Tata may be looking to generate cash to
help pay for the acquisition of JLR, which it took over from Ford in April at
a cost of £1.15 billion.
Despite buoyant sales of the Jaguar XF, the company has been hit
hard by the decline in global markets and earlier this week Tata revealed that
JLR had recorded a loss of £206 million after tax in the first six months
of the year.
3) MINI
Next Mini set to be built outside Britain
John Cranage, Automotive Correspondent, Birmingham Post 2nd October, 2008
The next new Mini could be built outside the UK, parent group BMW
said. The new car - set to be the biggest Mini ever built - is a Crossover concept
that combines a saloon car with four-wheel drive. The car was unveiled for the
first time at the Paris Motor Show on Thursday.
An announcement about production plans will be announced soon,
said BMW group sales and marketing director Ian Robertson. With BMW’s
Mini plant at Oxford now running at almost full capacity, there is speculation
that the Crossover is likely to be built abroad. Mr Robertson would not be drawn
on where the car will be built, except to say: “It might be somewhere
else other than Oxford.”
Nor would Mr Robertson, the first ever British main board director
at Munich-based BMW, say whether engines for the Crossover will come from the
group’s engine plant at Hams Hall near Birmingham. The factory produces
all BMW’s four-cylinder engines including those for the Mini. “We
don’t know yet where the engines will be sourced,” Mr Robertson
said.
He earlier gave an upbeat assessment of Mini’s sales in the
current financial crisis. “Mini is the world’s fastest growing premium
brand and in the US sales have increased by 25 per cent in the last nine months
are up by well over 25 per cent here in France.
“Up to the end of September we had sold 180,000 Mini’s
nine per cent more than in 2007." Mr Robertson said BMW was planning a
series of events to celebrate the 50th anniversary of Mini next year.
4) India Watch
Report: Tata begins exit from Nano site
Automotive News Europe 24th September, 2008
MUMBAI (Reuters) -- Tata Motors, India's top vehicle maker, has
started moving equipment from its factory in eastern India, the Times of India
newspaper said on Wednesday, as the company scrambles to launch the ultra-cheap
Nano car as planned. Tata Motors, which had planned to launch the Nano around
October, had suspended work at the plant in Singur in West Bengal state earlier
this month due to violent protests by farmers unhappy with the compensation
offered for their land.
While talks between the state and opposition politicians backing
the farmers were still underway, attacks on two security guards at the factory
on Monday "might have been the last straw", the Times of India said,
citing unnamed government officials. Earlier, NDTV Profit news channel had reported
the company was likely to make a public announcement about its exit from West
Bengal next week "unless something dramatic happens very soon".
A spokesman for Tata Motors declined comment on the reports. At
the time of suspending work in Singur on September 2, Tata Motors had said it
was considering alternate locations to make the Nano, billed as the world's
cheapest car. Last week, Tata Motors, which aims to price the Nano at just above
100,000 rupees ($2,183), said southern Karnataka state, where it is already
building a commercial vehicle plant, had offered land.
Tata Motors' managing director said at the time they were "actively"
looking at alternatives including Karnataka. Other states have also made offers
to the Tatas, India's second-largest conglomerate with interests ranging from
salt to software. "It is doubtful at this stage whether Tata Motors will
be prepared to sit and wait for at least another fortnight for the situation
to be resolved," said Ian Fletcher, automotive analyst at research firm
Global Insight in London. "The other alternative is to move the entire
project to one of the other states that have expressed an interest ... but it
is uncertain whether Tata would be prepared to undergo such upheaval so close
to the completion of the project," he said.
Cost overruns caused by the delays in Singur have already raised
the cost of the Nano project. The company, India's third-biggest carmaker, may
be able to roll out a few hundreds or a few thousands of Nano cars from a plant
in northern Uttarakhand state or from the western city of Pune, analysts have
said. But the rollout will fall well below the planned initial capacity of 250,000
units at the Singur plant.
The launch of the Nano in October, the peak of the festival season
in India when demand rises, is crucial for the company, which is seeing softer
demand for its dominant commercial vehicles because of high interest rates and
fuel prices.