The Big Question: As Jaguar/Land Rover is bought by Tata, is the UK car industry finished?
Why are we asking this now?
Because the US motor giant Ford has just sold two of the proudest names in the British car industry – Jaguar and Land Rover – to Tata of India. Some 16,000 jobs are at stake. Given India's relatively low cost base and rapidly expanding market for vehicles, there is naturally some concern about the future of the marques. The worry is that Tata could do what the Chinese car companies Shanghai Automotive and Nanjing did to MG Rover and simply seize control of the intellectual rights to the designs and brands and move production eastwards. An Indian rather than a Chinese take-away, perhaps. However, that is a worst-case scenario – the future could be a lot brighter.
Do we still make cars in Britain?
Yes, lots. Production last year was just over 1.5 million, just off its recent high of 1.6 million and below the all-time peak of almost 2 million reached in 1972, but still way up on the dark days of the late 1970s and early 1980s. British cars are now better value and sell more abroad.
What will happen to Jaguar/Land Rover?
In the short-term, very little. Production will continue and Ford will continue to supply engines and other components to the companies. In the medium-term, the chances are that production of the more basic Land Rover models will migrate to India. The principal candidate for relocation would be Land Rover's Defender – beloved of the British Army. The potential for this vehicle in emerging markets is huge. However, that would leave most of the more sophisticated designs, such as the highly profitable Range Rover, in Britain. In the long-term, a small Jaguar might be built in India, with the more lucrative, more expensive models still made here. Such a strategy might yield impressive global results.
Is the Jaguar an endangered species?
Last year, Land Rover built 232,548 cars and made a profit, although not a huge one. Jaguar is different and much depends on new models the company is developing. Jaguar simply does not sell enough cars to justify its present production capacity and pretensions – and that is fundamentally why it loses money. Having made 54,000 cars last year, it is a tiddler by global standards and small even for a premium marque. It is dwarfed by BMW, Mercedes-Benz and Lexus and is about half the size of also-rans such as Saab or Alfa Romeo – in other words barely viable. It desperately needs to improve sales.
In the recent past, it suffered from too many "retro" designs which, although elegant and superbly engineered, looked a bit fuddy-duddy. Until recently, there was also few diesel options – a major handicap in the European market. That is now being rectified with the release of the more modern-looking XF saloon. Any replacement for the large XJ limousine and smaller X-Type model, if there is one, will have to be similarly avant garde. Jaguar and Land Rover will also have to catch up with the Germans and Japanese in advanced engineering – not least in developing greener diesel, hybrid and hydrogen fuel cell technologies.
Jaguar was also plagued, as it has been on and off since the mid-1970s, by quality and reliability issues. Americans once joked that they bought their Jags in pairs: one to drive while the other was in the garage. Quality has improved vastly in recent years, but it takes a long time to rebuild reputations. Land Rover has been just as bad but somehow seems to have escaped the stigma, and is also moving up the customer satisfaction tables.
Are British jobs safe?
The unions seem cautiously optimistic but many analysts think that Jaguar/Land Rover has one too many car plants. Its Halewood factory on Merseyside is probably safe because it is more efficient than the Solihull (Land Rover) or Castle Bromwich (Jaguar) sites. Jaguar closed its main plant at Browns Lane, Coventry, in 2005, so its costs are lower than they used to be.
Can Tata do it?
The family-owned Tata conglomerate is a massive and well capitalised company into everything from information technology consultancy to Tetley Tea. More relevantly, it owns the Anglo-Dutch steel company Corus and its own automotive division, which recently unveiled the Tata Nano – India's car for the masses. If all goes well, Tata will invest in the Jaguar and Land Rover brands and reap rewards which eluded Ford, thereby securing British jobs. In return, Tata will learn much about the premium and executive car markets it is desperate to enter.
Who owns Britain's car industry?
A collection of Japanese, German, American and now Indian based transnationals. With the demise of MG Rover in 2005, the last remotely serious volume manufacturer was lost to the nation. Most of our surviving famous names are in the hands of "foreigners" – Mini and Rolls-Royce are subsidiaries of BMW, Bentley is in the loving care of Volkswagen, Vauxhall is still owned by General Motors of the US and Ford retains engine and van-making operations in Britain. The biggest growth in the British car industry has come from the Japanese brands. Margaret Thatcher opened Nissan's plant in Sunderland more than 20 years ago and it is still one of the most efficient in Europe. The company is the UK's biggest car manufacturer. Toyota and Honda are also significant players and Tata will hope to emulate the successes of all three. Even the Malaysian company Proton owns a slice of our heritage, in the sporty shape of Lotus, while Nanjing Automotive of China is promising the return of small-scale MG sports car production to Longbridge in Birmingham. The Russians own LDV Vans – a vestige of the old British Leyland. Only specialist manufacturers such as Morgan and Bristol can be said to be British in the traditional sense.
Does the UK industry have a future?
Yes. Nissan, (353,718 cars), Toyota (277,852 cars) and Honda (237,772 cars) have proved that Britain can make competitive products in large numbers. They have taken up the slack from the end of car-making at historic sites such as Longbridge, Ryton, Dagenham and Luton (although Morris Motors' old factory at Cowley, Oxford, is happily churning out record numbers of new Minis). GM will build the next generation Astra at the Vauxhall factory at Ellesmere Port, while commercial vehicle production – especially vans, is at a high.
At the other end of the spectrum, Bentley is making 10,000 cars in Crewe this year, while Rolls-Royce will build 1,000 at Goodwood in West Sussex. Aston Martin, recently sold by Ford to private investors, is another winning marque. Apart from Italy, no other nation is so successful at producing luxury cars. Hopefully, Jaguar and Land Rover will continue to make their presence felt as well.
Is the British car manufacturing industry safe for the time being?
* We still make more than 1.5 million cars each year in Britain, the same level of production seen in the mid-1970s.
* Though British brands have been bought by foreign firms, that has not been accompanied by the disappearance of UK car-making.
* Tata is a huge company, capable of injecting cash and new ideas into a company. Britain could benefit from the purchase.
* British car brands have been picked off by foreign buyers over the past 20 years.
* While unions may be optimistic about jobs, some analysts say there are too many car plants in this country.
* With Jaguar and Land Rover being bought by Tata of India, there are natural fears of jobs being transferred abroad.
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