Page last updated at 07:09 GMT, Friday, 26 December 2008

'A year to forget' for carmakers

By Peter Plisner
BBC Midlands transport correspondent

It is a year that the Midlands automotive industry would probably prefer to forget.

A collapse on sales, production levels cut and job losses the likes of which have not been seen since the demise of MG Rover.

But 2008 had started so well.

Jaguar XF
Jaguar Land Rover was bought by Tata in March

After several years of losses, Jaguar was finally doing well with rising sales following the successful launch of its new XF model.

Land Rover had just celebrated its best year ever with sales, both here and abroad showing healthy increases. Demand for its vehicles in China were up a staggering 429%.

The future of both companies was further boosted when it emerged that the Indian conglomerate Tata was in pole-position to acquire them from owner Ford.

Already suffering in America, it had decided that Jaguar and Land Rover were surplus to requirements and had to be sold.

Back to earth

By March the deal was done. Tata had paid more than 1bn for the two companies and for many it was the best possible outcome.

There had been concerns that alternative bidders, in the shape of equity firms, might have asset-stripped and cut jobs.

The sale of Jaguar and Land Rover brought a collective sigh of relief from not just the two companies' workforce, but also from those who supplied parts for the cars.

The region's components firms had already enjoyed a good year with strong order books. The completion of the sale meant that looked set to continue.

Lord Mandelson
Lord Mandelson said Jaguar Land Rover has well-resourced owners

However, the honeymoon did not last long. The credit crunch and the resulting global downturn brought many back to earth with a bump.

In the car industry the first real signs that something was happening came in June when car sales went into decline.

But worse was to come. By September car firms began talking about the introduction of short-time working and cutting shifts in an effort to match production levels to falling demand.

Jaguar and Land Rover moved onto a four-day week and revealed plans to cut hundreds of jobs through voluntary redundancy.

December brought one of the biggest shocks so far when luxury sports car maker Aston Martin announced that "extraordinary market conditions" had forced it cut up to 600 jobs, almost a third of its workforce.

Updated version

It had been thought those who could afford expensive cars would not be affected by the downturn, but they were.

One bright spot during the year was the rebirth of Longbridge as a location for making cars.

After the collapse of MG Rover many thought cars would never be made there again.

But true to its word Nanjing, the company that bought the Rover assets and new partner Shanghai Automotive started producing an updated version of the old MGTF sports car.

As the year came to an end the situation showed no signs of improving.

Jaguar emblem
Jaguar and Land Rover moved onto a four-day week

The Business Secretary Lord Mandelson faced a major dilemma.

He had already spent billions of pounds bailing out the banks - should he do the same for the car industry?

And, despite its importance as a volume manufacturer, should the UK taxpayer support Jaguar and Land Rover, when its Indian owner Tata was still profitable?

Speaking to the BBC, Lord Mandelson was keen to remind Tata that the ball was firmly in its court.

Jaguar Land Rover, he said, has owners who are well-resourced, who have the first responsibility for sustaining the companies.

New model

The year ahead looks like it will be just as challenging as the year just gone for all those involved in the automotive industry.

Hopefully there will be some good news.

Land Rover is expected to announce that its next model, the environmentally-friendly LRX, will go into production, probably in Solihull.

Jaguar too has another new model up its sleeve in the shape of the revamped XJ, due for launch in late 2009.

Nobody really knows what the Midlands automotive industry will look like in 12 months.

There is little doubt that there will be fewer people making cars and the parts that go into them.

By then, it is hoped, there will be signs of recovery, not just from the recession, but also new hope for an industry that has served the Midlands so well in the past and hopefully will continue to do so well into the future.

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