Consultants are looking into operations at Jaguar Land Rover after being called in by owner Tata Motors to stem losses and drive the group back to break-even point.
Tata said in Mumbai it had appointed KPMG and Roland Berger Strategy Consultants to advise on cost-cutting and cash management at JLR.
The announcement of the move comes after Tata revealed pre-tax losses for Jaguar and Land Rover combined of nearly £350 million in 2008 compared with a pre-tax profit for the two marques of £660.5 million in 2007. Tata said the consultancies had been working with Jaguar Land Rover for just over two months.
Ravi Kant, Tata Motors vice-chairman, said: “It’s a very hands-on approach, with discussions every fortnight to reach break-even point.”
A spokesman for JLR said: “We have appointed two consultancies who are working with us. The exercise is on cash-flow, cost controls etc and this will bring about major improvement over a period of time.”
Mr Kant has been rumoured to be taking on a more hands-on role at JLR to turn around its fortunes. The Birmingham Post reported yesterday that Jaguar Land Rover has seen a swing of more than £1 billion from a profitable 2007 to an after-tax loss of £673.4 million last year. Land Rover was hit particularly hard, with an after-tax loss of £561.8 million, compared to a profit of £319.8 million the year before, while falling Jaguar sales saw a £261.7 million profit in 2007 become a £111.6 million loss last year.
Meanwhile Tata posted a better-than-expected £69 million profit for the last three months.
The consultancy move follows around 2,000 voluntary redundancies across Jaguar Land Rover over the past year and a series of production cutbacks at both Solihull and Castle Bromwich.
But a decision on an underwriting by the Government of a £340 million European Investment bank loan is still to be agreed despite more than three months of talks between JLR and Lord Mandelson’s Business Department.
The talks reached near breaking point last week with the leaking of a letter by Lord Mandelson to Tata accusing the Indian group of “lack of pace in considering negotiations on possible UK Government support to Jaguar Land Rover.”
The Government has already indicated it is only willing to guarantee £175 million of the EIB loan and negotiations are continuing between the parties.