Jaguar Land Rover could double the number of cars it produces over the next five years to more than half a million – a move which would in all likelihood lead to the creation of a new UK plant - according to a leading figure in the automotive industry.
Lord Kumar Bhattacharyya, director of Warwick Manufacturing Group, made the prediction after the firm posted record annual profits of £1.5 billion – one of the largest figures ever recorded by a Midland firm.
The manufacturer saw its profits smash last year’s record of £1.1 billion as demand continues to grow worldwide, particularly in China where sales now account for nearly one in five of the cars sold by the business.
Lord Bhattacharyya, who enjoys a close relationship with JLR owners Tata Motors having played a key role in the Indian company acquiring the UK car manufacturer, said: “The future looks absolutely amazing. The company was in the dumps three years ago and has been turned around, which shows in the Midlands we can do it.”
The firm has made no secret of its plans to ramp up production at its three UK factories in Solihull, Castle Bromwich and Halewood but even then it might still struggle to keep pace with soaring demand.
JLR already assembles the Land Rover Freelander at Tata Motor’s Pune plant in India and also recently signed a partnership agreement with Chery Automobile in China to make vehicles there.
But Lord Bhattacharyya believes UK production will also need to increase dramatically.
“What is important is their growth trajectory, which is phenomenal,” he said. “I wouldn’t be surprised if in five years time they have doubled their output, on top of what they are doing in China. If you are going to sweat a plant and double it eventually you will need an extra plant.
“I am pretty sure in the background they are looking at and thinking about these sorts of things as there’s no way they would be able to double output at the current plants.
“They need more output from the current plants and need to be more competitive to compete with the Germans, Japanese and Koreans. There is a limit to how far you can go with the current plants.”
JLR sold 314,433 cars last year, the highest figure ever, representing growth of 29.1 per cent.
The company turned over £13.5 billion which represented growth of 36.9 per cent over the £9.9 billion last year.
Its popularity has been aided by the success of its Range Rover Evoque model, produced at its Halewood plant. It has struggled to meet demand for the model, and the entire 2012 production run is already sold out.
It has also been developing new models, including the new Jaguar XF Sportbrake, set to go on sale this autumn, and the Jaguar F-Type which has been billed as the spiritual successor to the legendary E Type. While the value of the Chinese market is soaring with a 76 per cent sales rise last year the UK remained its biggest market for retail sales, up 3.2 per cent to 60,000.
JLR also revealed it enjoyed a strong final quarter of its financial year, with the number of cars it sold up 48 per cent to 98,000.
The company is set to open a new engine plant in Wolverhampton and recently revealed plans which could see a £200 million investment in its Castle Bromwich factory. Lord Bhattacharyya also praised the firm for the inroads it had made into European markets, particularly Germany and for its huge investment in R&D.
“As well as the Chinese and European markets they have penetrated the German market and it is very difficult for British cars to get into the German market,” he said.
“On top of that there is the huge sum of £2.5 billion worth of R&D per year and there aren’t very many companies that are committed to that.”
In addition he said the spin-off effect for smaller companies in the supply chain could not be under-estimated.
“What is more promising about growth prospects in the West Midlands is small and medium sized companies are seeing positive news for the first time in their own investment,” he said. “That is what is phenomenal. Small and medium sized companies are suddenly realising there is an opportunity for growth.
“They can borrow money and invest and are going to get a return on their investment. Nowadays growth in most countries comes from infrastructure, from suppliers. There are 20,000 people employed by JLR but 100,000 employed when you take into account suppliers.”
And Lord Bhattacharyya praised Tata for its long term vision and commitment, highlighting the fact chairman Ratan Tata makes regular visits to JLR.