Toyota output slumps while JLR roars ahead

Domestic production at the world's largest carmaker is down 75%, but things are looking up in the UK - Jaguar Land Rover has posted £1bn profit.

by Andrew Saunders
Last Updated: 06 Nov 2012
Toyota has said that tsunami-related disruption and ongong supply chain difficulties (ie shortage of parts) means that output as its Japanese plants in April was barely a quarter that of the same month last year. And although it is recovering rapidly it may well lose its global industry top slot to GM as a result.

Meanwhile, a lot closer to home, Jaguar Land Rover has posted a stirring performance, with profits of £1bn on revenues of £10bn – results made all the more impressive given that last year the firm barely managed to break even.

The two firms represent pretty much opposite ends of the global car maker spectrum – JLR being a premium brand and a small one at that, producing under a quarter of a million cars a year compared with well over seven million vehicles churned out by Toyota last year.

JLR’s results should be welcomed by its 17,000 UK employees at three factories in the West Midlands and Merseyside. Especially since it’s only a couple of years since they were all on short time and the firm was struggling to survive, desperately seeking a £500m government bailout, which, unlike the very much larger one for the banks, never materialised.

It is hugely to the credit of JLR’s staff and management that the firm managed to raise the necessary commercial finance, and make such a strong comeback. Indeed, if the government had stumped up the cash, the taxpayer might have done rather nicely out of its investment.

So what’s been driving the leaping cat? Well, Indian owner Tata Group said it’s all down to its investment in R’n’D and product development – new models and new technology in essence. And there’s much truth in that – Tata has been sinking £1bn a year in R’n’D since 2009, and plans to continue doing so for the next five years. That’s a lot of money.

Land Rovers and Range Rovers in particular have been going down a storm in China and the emerging markets. Sales of the SUV’s are up 33% in China and 61% in India, while demand for Jaguars in Russia is up by a whopping 70%. The weak pound hasn’t done the firm any harm either, making prices more competitive.

Back in Japan, Honda’s domestic output was also down, by no less than 81%, while Honda’s production took a ‘mere’ 49% hit. Satellite factories around the world have also had to cut production due to parts shortages. But if Toyota does lose the number one slot to GM it may well only be a temporary setback – the firm is expecting to be back up to pre-tsunami output levels later this year.

As for JLR, there’s a long way to go before it can seriously challenge Germans rivals Mercedes and BMW, at least in terms of sales volumes. But this is a very promising start. The big question has to remain though – with all that sales growth in the emerging markets, how long will actually making the cars in the UK continue to make economic sense?

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