Jaguar Land Rover Goes From Requesting Money To Record Profits

At the height of the economic recession, Jaguar Land Rover asked the UK government for financial assistance. Now, the luxury automaker is raking in record profits. The announcement on Thursday of a £1 billion profit may be just the beginning step on a golden road for the carmaker.

Jaguar Land Rover Chief Executive David Smith characterized the UK car industry as being in a “national emergency” in December 2008. Year-over-year car sales had fallen 33 percent and Mr. Smith stated that “urgent action” was necessary.

Behind closed doors, Mr. Smith informed then-Business Secretary Lord Mandelson that without financial support from the government, thousands of people would lose their jobs.

Government aid was never secured so Jaguar Land Rover turned to its parent company, growing emerging markets, and its committed British workforce to weather the difficult times. This involved obtaining £500 million in commercial financing and investing £1 billion in company money to continue research and development and allow the company to remain afloat.

The £1 billion annual R&D investment continued each year thereafter and will be made for at least five more years.

Ralf Speth is now chief executive of Jaguar Land Rover. He stated that this investment will lead to a product development program unlike anything these brands have ever witnessed. The commitment to Britain is strong, with owners like India’s Ratan Tata recognizing the high-quality engineering workforce and the British heritage of the two brands.

Research and development have already led to projects like the CX-75, a hybrid supercar, and the Range Rover Evoque. Sales are surging in economies in eastern countries. Russia now accounts for 5 percent of sales and China for 11 percent.

Middle class consumers in these and other booming economies may soon be taking car loans to purchase one of the forty Jaguar Land Rover models planned for future release.