Jaguar Land Rover’s sale to PSA is inevitable – but the French car maker could make a good new owner.
That is the verdict of former Land Rover chief engineer Dr Charles Tennant, though he has also warned the acquisition could prove painful in terms of the cuts that would almost certainly come in the wake of it.
Mr Tennant spoke to CoventryLive after reports emerged suggesting Jaguar Land Rover is on the brink of being sold to PSA.
The PSA Group, which owns the Peugeot, Citroen and Vauxhall-Opel brands, is poised to step-in and take over the Coventry car maker according to the Press Association.
A Press Association report says leaked information suggests a sale of Jaguar Land Rover could be imminent.
It is understood a “post-sale integration document”, which outlines the benefits of the two companies joining forces, is already in circulation and the firms are exploring the detail of cost savings after a tie-up – which given the size of both companies would be a PSA takeover rather than a merger.
Reacting to the mounting speculation Mr Tennant, who was also a director of Tata Motors’ European Technical Centre, said such a move should not come as a surprise.
He said: “This comes as no surprise at all and we should not take any notice of either Tata Motors or Jaguar Land Rover denials at all.
“They are obliged to deny it until the ink is dry on the contract.”Mr Tennant added: “I advised Lord Bhattacharyya – who until his sad passing was himself advising Ratan Tata on Jaguar Land Rover strategy – last year that Jaguar Land Rover was in a death spiral of its own making, and that Tata would need to fund massive losses and investment now or sell up.
“Well the falling sales and losses at Jaguar Land Rover have just escalated since then and Tata have been very quiet whilst considering what best to do for them.
As far as the likelihood of the sale is concerned, Dr Tennant described it as “inevitable” and said although PSA should prove a good owner that rationalisation would almost certainly follow.
He said: “Clearly the Peugeot talks are at an advanced stage, and their top management have already indicated a desire to enter the premium and luxury market, so a Jaguar Land Rover acquisition is like a dream come true for them – just as it was for Tata Motors only 11 years ago.
“It is now inevitable that Jaguar Land Rover will be sold off, and I think Peugeot could be a very cohesive new owner.
“They have the need and cash to do it.
“Mind you I’m afraid that the next stages will be drastic and painful with the inevitable rationalisation of product and production sites, whilst planning for future electrification.
“But this is just a process of creative destruction where new technologies and products have to be implemented to safeguard the future of industries and companies, and their employment.
“As I said once before, for Jaguar Land Rover’s loyal work force and numerous owners over the years that is deja vu.”
Tata Motors recently said there was “no truth to rumours that Tata Motors is looking to divest its stake in Jaguar Land Rover ” but speculation about a sell-off has continued.
Some analysts suggested Tata may sell-off Jaguar, the smaller of the car maker’s two brands, as an alternative way forward.
However Mr Tennant dismissed that, saying that both marques were now so intertwined it would make such a move almost impossible from an engineering perspective.
He said: “The alternatives of Tata doing joint ventures or selling off, say Jaguar alone, won’t work because of the appalling state of affairs the whole company finds itself in.
“Also, Jaguar Land Rover is now so heavily integrated it would be a minefield trying to disentangle Jaguar from Land Rover.”
Jaguar Land Rover is in the midst of a massive restructure after announcing a loss and slowing sales for the first time since it was acquired by Tata.
It is in the process of trying to save £2.5 billion and earlier this years announced it was cutting more than 4,000 jobs.
In February, it revealed a hefty quarterly loss of £273m in the three months to December 31, 2018, blaming Brexit uncertainty, slowing sales in China and declining demand for diesel vehicles.
Dr Tennant also highlighted product issues with the company, including a gap of almost four years between production of the iconic Land Rover Defender ending and its replacement being unveiled
He said: “ Jaguar Land Rover have been gradually releasing information about the Land Rover Defender launch for next year, even claiming that its late entry into the market place is a good thing to make sure they get it right.
“I don’t know of many auto companies that actually stop making a product for four years before the replacement is ready.
“Also, it is to be noted that the most recent vehicle – the Range Rover Evoque – still does not have plug-in hybrid or electric options because it has not been designed to fully accommodate electrification until 2025.
“In addition the updated Jaguar XE is still only a one horse solution, with no estate, or coupe derivatives to bolster future sales.
“This is all about a new product introduction process that has failed in areas of product planning, investment priorities, robust product development, manufacturing capacity planning, and quality.”
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