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It seems Jaguar Land Rover deal is too expensive for Corus Boss TATAs

By Amarendra Bhushan for CEOWORLD Magazine Updated:December 22, 2008

The Indian owners Tata Motors of Jaguar Land Rover have reportedly agreed to inject “tens of millions” of pounds into the luxury British car maker to stem a cash flow crisis. Tata, one of India’s biggest firms, bought JLR from Ford last March for £1.15bn.

Linkening JLR to General Motors which is very poorly run is like comparing apples with oranges – they both make cars that is the end of the comparison. Land Rover and Jaguar have the problem that their products have grown too large in size, weight and cost.

Why are car marques now being classified by who owns them??

An outside investor took a crumbling British luxury car brand firm out of a mess and is trying to save british jobs while other firms stop production so this move should be encouraged. It seemes the additional cash from Tata Motors, which bought JLR earlier this year, has bought Government ministers breathing space as they consider whether to provide state support for the ailing West Midlands-based manufacturer.

What is the problem with that??

Union leaders at JLR have warned that tens of thousands of jobs could be lost unless the Governement steps in immediately.

Car makers around the globe have been hit by a collapse in demand as the economic slowdown spreads and access to credit is choked off by the financial crisis. “Tata, the Indian owner of British luxury car brand Jaguar Land Rover, has agreed to inject ‘tens of millions’ of pounds into the British car company to prevent an immediate cash flow crisis, while the government continues to consider the case for a taxpayer- funded bail out,” the Financial Times has reported.

The carmaker has asked the government for financial support and its case has been backed by unions which say the industry needs help.

Labour peer Lord Bhattacharyya had suggested ministers were discussing a £667m loan package for Jaguar.

But Lord Mandelson said that Tata group must “look to their own resources.”

Jaguar Land Rover has been hit hard by a dramatic slump in sales that has affected carmakers across the world.

In the US, the government has agreed to a $17.4bn (£11.6bn; 12.4bn euros) bail-out package for its auto industry.

In the UK, the Confederation of British Industry has said urgent government loans are needed to preserve 800,000 UK jobs in the carmaking industry. The Unite union says tens of thousands of skilled jobs are “hanging by a thread”.

Ministers have appointed KPMG and NM Rothschild to advise them on the Indian group’s complex finances and to assess demands from the car sector, the Financial Times said.

A Tata spokesman said: “The company is resolved to do all it can to help all its businesses. The entire world has gone into a downturn; these are extraordinary times.”

He said that it was “difficult to quantify” how much money the company has pumped in to Jaguar but it is understood to be tens of millions of pounds.

Tata had said it is also facing cashflow difficulties due to a drop in the price of steel, one of its key products.

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