Will the legendary Defender come to the rescue with a re-introduction to the United States to save the company's rising and falling sales?
Tata Motors, the Indian company that we all know owns Jaguar Land Rover, turned a profit in the second quarter after it cut costs at Jaguar, so says one report. Reuters says Tata Motors' Jaguar Land Rover unit reported a net loss of 60 million pounds ($99 million) in the third quarter and had debt of 90 billion rupees ($1.92 billion), this from the Indian firm's chief financial officer.
The consolidated new income in the quarter ended in Sept. 30 was 217.8 million rupees ($4.6 million), compared with a loss of 9.42 billion rupees a year earlier, the Mumbai-based company said in a statement today. Sales fell 8.5 percent to 208.9 billion rupees. You've got to put things in perspective, apparently.
Chairman Ratan Tata 71, has hired KPMG International and Roland Berger Strategy Consultants to help cut costs at the U.K.-based division. JLR has already cut 2,200 jobs this year, and said in September it may close one of two factories in England’s West Midlands, which has a lot of workers understandably up in arms.
Nevertheless, analysts are pretty rosy about JLR’s future, for a number of reasons.
“The worst is certainly over for Tata Motors,” said Jatin Chawla, a Mumbai-based analyst at India Infoline Ltd. “The environment has stabilized for Jaguar Land Rover and the cost- cutting measures have also helped.”
The U.K.-based unit is expected to break even in the fiscal year ending March 31, 2012, Chawla said. Tata Motors Chairman Ratan Tata said he expects Jaguar Land Rover to turn around after a “very difficult” time. The company aims to sell as many as 25,000 Jaguar XJ cars annually starting next quarter, according to Ian Callum, Jaguar’s design Director.
Another reason? Tata is considering fund raising options to reduce its 200 billion rupee total debt, of which Jaguar Land Rover accounts for 90 billion rupees.
Although Americans haven’t been able to purchase a new Defender since 1997 due to a lack of mandatory airbags, a new secret development (OK, maybe not so secret) called Project ICON is looking seriously at reintroducing the legendary Defender to U.S. shores, among other places around the world, perhaps as early as 2013.
The new Defender will reportedly ride on the T5 steel platform chassis used on the Discovery and Range Rover Sport models, meaning Land Rover will be able to continue offering the Defender in hard/soft tops and truck/cab versions. Upgrades will likely include an all-independent suspension, available with both steel and air springs and a new 5.0-liter V-8. Airbags, we’re thinking, will likely be standard equipment.
“Defender is our heritage,” said Land Rover Managing Director, Phil Popham. “It underlines our history, our origins, our engineering credibility and leadership, and it’s passed on a lot of positive things to the products that followed.”
“The dilemma we’ve got as a company, when it comes to replacing an icon like Defender, is you’re replacing a car that is known throughout the world and has been for 61 years, but its sells 25,000 units a year – not a lot in the automotive industry and not a lot within our portfolio of products at the moment,” he said.
“You've got to sell a lot more than 25,000 vehicles off a new platform to make business sense.”
Like, how many?
Popham said: “If you significantly simplify it on a modern platform, you still need to sell about 50,000 units a year to make it viable.”
Still, Popham believes nearly doubling worldwide Defender sales is doable because the current model is not sold in countries where it doesn’t meet various regulations. A modernized Defender would open up more markets, including the United States.
“Before 2013 we need to be very certain and have planned what the replacement for that product is. We’ll be really tuning up the versatility side and practicality side. That for me is the core (Defender attribute),” he said.
True that. The bottom line seems to be that, through cost-cutting measures, careful planning for the future and a turn-around in the world economy, Tata’s 1.7 billion pound gamble may soon be paying off… for all of us.
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