Jaguar Land Rover plans to build electric cars at UK factory: Report

Britain's biggest automaker Jaguar Land Rover is expected to announce plans next week to build electric cars at its central English Castle Bromwich factory, the Sunday Times reported.
An all-electric version of its XJ luxury saloon will be the first of three new vehicles to be made from a common skeleton followed by a sport utility vehicle, the newspaper said.

The company could not immediately be reached for comment late on Saturday.
The move would be a rare bright spot for the British automotive sector which has been hit by job cuts, plant closure announcements and falling sales in recent months linked to tumbling demand for diesel vehicles and Brexit uncertainty.

Have your cake and eat it too: How Tata can save JLR without selling stake

India’s Tata Group should treat the speed bump at Jaguar Land Rover as a timely memo: The $102 billion salt-to-software conglomerate can no longer put off listing its closely held parent.
UK-based Jaguar Land Rover Automotive Plc is burning cash on electric-vehicle technology just as the double whammy of a Chinese auto slowdown and Brexit threatens margins and sales. At average cash burn rates of 670 million pounds ($882 million) a quarter, the British carmaker may struggle to make it through another year, my colleague Anjani Trivedi wrote last month after it took an asset impairment charge of 3.1 billion pounds.

Had holding company Tata Sons Ltd. been a publicly traded firm, it could have raised equity relatively easily to help tide JLR over. Instead, Tata Motors Ltd., which acquired JLR in 2008, is exploring strategic options including a sale of a stake in the UK unit, Bloomberg News reported. Although Tata Motors says there’s “no truth to the rumors,” the bond market was a little relieved.
Investors’ concerns haven’t fully dissipated, and that shows the problem with the sprawling Tata Group’s structure. In the current scheme of things, the holding company and its 66-per cent owners — who happen to be charitable trusts — depend on payouts from software services provider Tata Consultancy Services Ltd. as well as Jaguar Land Rover to keep the empire ticking.
The insufficiency of those dividends became a sore point in a 2016 boardroom battle between patriarch Ratan Tata and Chairman Cyrus Mistry, who was abruptly ousted after less than four years. Borrowing on the strength of operating companies’ cash flows has a limit. Next year will see a record $17.5 billion of debt mature, according to bonds and loans data compiled by Bloomberg. The conglomerate must step up investment in order to generate more free cash.
Last year’s $5 billion purchase of bankrupt Bhushan Steel Ltd., which supplies metal to auto and appliance makers, is a step in that direction. The move helps group boss Natarajan Chandrasekaran cut Tata Steel Ltd.’s reliance on a less-than-rewarding construction industry.
Still, it’s Jaguar Land Rover that should worry him. JLR has avoided investing in entry-level crossovers — which account for a quarter of sales at rivals BMW AG and Daimler AG’s Mercedes-Benz — because of its expensive focus on electric vehicles, as Deepesh Rathore, analyst at Emerging Markets Automotive Advisors, said in a Bloomberg Television interview.
Demand isn’t collapsing. Global auto sales have been growing very slowly for two years at least. Short-term volatility aside, that may not change unless income growth is disrupted, says Jonathan Wilmot, global strategist at Aletheia Capital. Even so, with potential buyers waiting for electric cars to mature, the opportunity to list JLR has been lost for the moment.
When I suggested a Jaguar Land Rover IPO in Hong Kong or London, Chandra, as he’s known, had just been named Tata Sons’ chairman. Two years on, however, it may be better to float the parent. In his recent book, Mukund Rajan, who formerly oversaw brands across the group, estimates the value of the Tata Sons assets owned by the philanthropic trusts at $80 billion to $90 billion. If the trustees sold $10 billion to the public, the offer would almost equal India’s three biggest IPOs combined. The market wouldn’t be able to digest it.
ALSO READ: Jaguar Land Rover set for major investment in UK amid turmoil in market
But Hong Kong could. The Securities and Exchange Board of India might have to tweak its rules and allow Tata Sons to go overseas. The trusts could then plow the proceeds back into Tata Sons as 20-year redeemable preference shares, which is what they used to do before they prematurely liquidated them over disagreements with ex-chairman Mistry’s dividend policy.
Preferred shares would give the charities assured dividends to carry on with their social mission; Tata Sons would get liquidity to pay down debt, especially at Jaguar Land Rover; the marquee British automaker would get time to shore up its product portfolio; and the Tata Group would have a stronger hold over the (tarnished) jewel in its crown. Meanwhile, a bitter legal battle with the Mistry family, which can’t freely sell its 18 percent stake, might end if Tata Sons bought back the shares at fair market value. And Hong Kong would snag its biggest IPO since insurer AIA Group Ltd.’s 2010 float.
It’s time Chandra put an IPO plan into top gear.
ALSO READ: Tata explores strategic options for struggling Jaguar Land Rover unit
Citigroup Inc. did chalk out a plan to list Tata Sons a few years ago, but it went nowhere.

Jaguar's Indian revival choked on European diesel, China slump

The purchase of the storied Jaguar and Land Rover auto brands in 2008 handed India’s Tata Group a challenge that had long frustrated Ford Motor Co., the British marques’ previous owner: How to eke out a profit.
For a while, Tata seemed to have found the answer. Within a couple of years of the acquisition, Jaguar Land Rover Automotive Plc was making money. Its Range Rover Evoque, a compact SUV with a distinctive crunched rear roof, was a runaway hit -- so much so that the former Spice Girl Victoria Beckham got involved in a special edition. The Evoque powered JLR’s profits for years, accounting for most of parent Tata Motors Ltd.’s earnings in the first half of the decade. The company’s market value soared above $29 billion in 2015.

Then China’s slowdown hit sales in what was once the carmaker’s most important market; the U.K. voted to break away from the European Union; and India’s biggest conglomerate was wracked by a power struggle as Ratan Tata fired his handpicked successor. JLR was also slow to reduce its reliance on diesel vehicles in Europe. The outlook is now so dire that Tata executives are said to be exploring the possibility of selling part of the luxury-car unit.
“JLR faces all these challenges and more, as it is the smallest of the mainstream luxury carmakers, barring Volvo,” said Deepesh Rathore, London-based director at Emerging Markets Automotive Advisors. Sweden’s Volvo Cars is owned by China’s Zhejiang Geely Holding Group Co.
Tata Motors said Friday there was "no truth to the rumors" that it’s looking to sell its JLR stake, and declined to comment further.
Record Loss
Tata Motors, whose shares fell 60 percent last year, posted a record loss of 270 billion rupees ($3.8 billion) in the December quarter, the biggest for an Indian company, as the British unit struggled. Shipments have collapsed in China, plunging 35 percent in the nine months to Dec. 31. The company is eliminating 4,500 jobs, or about 10 percent of its global workforce, and on Feb. 7 took investors aback with a plan to write down its JLR investment by $3.9 billion.
JLR, which also makes the Jaguar XE sedan and the Land Rover Discovery SUV, needs to raise $1 billion in just over a year to replace maturing bonds -- a bigger challenge after S&P Global Ratings downgraded the unit in December for the second time in five months. That pushed the company’s debt deeper into S&P’s junk category.
Quality problems have weighed on both marques: A J.D. Power survey of 31 brands in June 2018 put them in the bottom two slots. Jaguar had 148 problems per 100 vehicles and Land Rover racked up a dizzying 160. Top-ranked Genesis, the luxury brand of Hyundai Motor Co., had 68.
Quality issues have added to JLR’s troubles in China, where the company had multiple recalls, said John Zeng, managing director of LMC Automotive Shanghai.
“This has greatly jeopardized Chinese consumers’ confidence in the brand value,” said Zeng. JLR’s “quality control capability and its after-sales network are not good enough to support its volume expansion or help it compete with rivals.”
The marques were therefore especially vulnerable to China’s slowdown. The world’s largest auto market shrank about 4 percent last year, the first such decline since the early 1990s.
As JLR struggles to restructure in China, it risks falling further behind German rivals. Competition is likely to increase “as German car brands such as Mercedes, BMW and Audi build more vehicles in the country,” Bloomberg Intelligence analysts Steve Man and Kevin Kim wrote Feb. 8.
Turmoil back in Mumbai hasn’t helped. A few years after retiring, Ratan Tata in 2016 ousted his successor Cyrus Mistry as chairman of Tata Sons, the group’s holding company. That followed a feud over Mistry’s plan to shed assets and his opposition to the world’s cheapest car, the egg-shaped Nano, among other things.
Land Rover still ranks as the most valuable of the major brands owned by Tata Group, which also controls Tetley tea and New York’s luxury Pierre hotel. The automotive marque was worth an estimated $6.2 billion last year, according to Interbrand.

After $4-bn write-down, Jaguar-Land Rover considering financing options

Jaguar Land Rover, reeling from a $4 billion writedown, a slump in China sales and uncertainty around Brexit, said conditions aren’t right for it to borrow from the bond market and that it’s seeking alternative funding.
The luxury automaker needs to raise $1 billion within 14 months to replace maturing bonds, while feeding an investment program for electric cars that’s burning through cash. To support its needs, JLR could increase a receivables facility or turn to other bank financing, with further options including leasing assets and tapping export credit, Treasurer Ben Birgbauer said in an interview.

JLR’s owner Tata Motors Ltd. shocked investors Thursday when it revealed the extent of the problems its U.K. arm is having in China. Sales of Jaguar sports cars and Land Rover SUVs dropped 35 percent in the world’s biggest auto market in the nine months to Dec. 31, sending the unit to a 273 million-pound ($354 million) loss and knocking as much as 30 percent off Tata stock.
“Market conditions presently are less favorable in general and our bonds are trading below par, reflecting our recent financial performance,” Birgbauer said by telephone. “We have always said we monitor the debt market and look to issue debt when market conditions are more favorable.”
Britain’s biggest carmaker is slashing 4,500 jobs, or about 10 percent of the workforce, as it responds to slowing sales. That’s on top of the 1,500 people who left the company in 2018. The measures will trigger a one-off charge of 200 million pounds in the current quarter.
JLR’s 4.5 percent bonds maturing Jan. 2026 have dropped to a low of 77 cents on the euro, equivalent to a yield of about 8.9 percent, according to prices compiled by Bloomberg.
The company is not planning to change its preference for unsecured financing, Birgbauer said. Remaining resources include a 1.9 billion-pound undrawn credit facility and 2.5 billion pounds of cash, based on the quarterly numbers published by Tata.
Dealer Crisis
One major problem facing JLR in China is an ineffective dealer network, according to a presentation from the U.K. business. Only 18 percent of outlets are in so-called tier-one cities like Shanghai and Beijing, and more than one-third have been open for three years or less.
The company now plans to overhaul the operation, cutting back on deliveries to reduce stock and investing in measures to boost its brand, logo and slogans.
Executives said on a conference call with investors that it’s not possible to predict when China volumes will begin to recover, highlighting international trade tensions and how much stimulus the state chooses to provide as determining factors. JLR says it can still grow global sales in fiscal 2020 with the help of other markets and the launch of revamped Range Rover Evoque.
Prior to this week concerns about JLR’s performance had centered on the impact of Brexit and a government clampdown on diesel-powered vehicles in depressing U.K. car sales.
Royal London Asset Management had already reduced its exposure to JLR in response to “Brexit-specific risks and their ability to maintain access to the financial markets,” said head of global high yield Azhar Hussain.
Appetite among investors for riskier European debt has yet to bounce back after volatility swept through the market at the end of last year. There’s been very few sales of junk debt in Europe this year and high-yield spreads remain much wider than prior to their fourth-quarter blowout.

JLR launches Range Rover Velar SUV, price starts at Rs 7.88 million

Tata Motors-owned Jaguar Land Rover today announced the market launch of its latest SUV model Range Rover Velar in India, priced between Rs 7.883 million and Rs 13.8 million (Rs 1.38 crore) (ex-showroom Delhi).
The company said it will start deliveries of the vehicle to customers from dealerships within a week to ten days.
"We have had a tremendous response to the Range Rover Velar and we are sold out till March," Jaguar Land Rover India President & MD Rohit Suri told PTI here.
He, however, did not share the total number of bookings so far.
JLR India had opened the bookings for the Range Rover Velar in December last year. The model will be sold in India as fully imported unit.
JLR launches Range Rover Velar SUV, price starts at Rs 7.88 million Rohit Suri, President & Managing Director, Jaguar Land Rover India Ltd at the launch of Range Rover Velar. BS Photo by Sanjay K Sharma
The new model is available in three engine options of 2- litre petrol, 2-litre diesel and 3-litre diesel.
The 2-litre engine variant in both petrol and diesel options are priced between Rs 7.883 million and Rs 9.186 million, while the 3-litre diesel variant is tagged at a price ranging from Rs 11-13.8 million (all prices ex-showroom Delhi).
The Range Rover Velar is positioned between the Range Rover Evoque and Range Rover Sport. It is equipped with features such as torque-on-demand all-wheel-drive (AWD) system for all-terrain performance and agility.
Jaguar Land Rover India had posted 49 per cent increase in total sales at 3,954 units in 2017 as against 2,653 units in 2016.
JLR launches Range Rover Velar SUV, price starts at Rs 7.88 million Rohit Suri, President & Managing Director, Jaguar Land Rover India Ltd at the launch of Range Rover Velar. BS Photo by Sanjay K Sharma
"Last year our business grew exponentially. This is a reflection of more and more JLR products becoming popular in India," Suri said.
JLR's SUV portfolio in India includes Discovery Sport (starting price Rs 4.2 million), Range Rover Evoque (Rs 4.444 million ), Discovery (Rs 7.138 million), Range Rover Sport (Rs 9.382 million) and Range Rover (Rs 16.6 million).
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)