Jaguar Land Rover (JLR) returned to profit in the last three months of 2009 – the first time it has been in the black since it was sold to Tata Motors for £1.5bn in March 2008, the Indian company said yesterday.
The global recession decimated the car industry almost as soon as the Tata deal went through, and JLR was particularly hard hit: Jaguar sold 21 per cent fewer cars last year than in 2008; Land Rover 23 per cent fewer.
But improvements in the economy are now trickling through to demand for luxury vehicles. In the three months to December, JLR's sales were 28 per cent higher than in the previous quarter. It sold 56,700 cars and made a profit after tax of 4.16bn rupees (£59m), compared with a net loss of £60m in the preceding three months.
Demand for Jaguars and Land Rovers has been particularly strong in the US, Europe and China. This helped Tata Motors to increase its revenue by 47 per cent to Rs268bn. Its net profit for the quarter was Rs6.5bn, compared with a Rs26bn loss in the same period the year before.
On Thursday, the European Investment Bank (EIB) signed off on a £340m, eight-year loan to Jaguar Land Rover to help the company develop low-carbon technology. Although the EIB first agreed the facility last April, the deal took months to finalise.
JLR, which employs 14,500 staff in the UK, had expected loan guarantees under the Government's emergency assistance package but the terms were so onerous that it could not agree them.
The loan is only now going ahead because JLR has secured guarantees from State Bank of India, the Bank of India and the Bank of Baroda. Credit Suisse, Standard Chartered, Deutsche Bank and JP Morgan are providing additional safeguards.
Alongside its request for loan guarantees for "green" technological work, JLR also asked the Business Secretary, Lord Mandelson, for working capital last year. The Government refused, and Tata eventually sourced £500m of funding for JLR from banks including the State Bank of India, Standard Chartered and Bank of Baroda.
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