Recently in Automotive Category

It was originally set up by the then DTI in 2005. Nearly four years and £16 million later, the DTI has had two name changes (BERR and now BIS), and the long-awaited MG Rover has - at last - been completed.

Local MP Richard Burden who was told that the report has been completed, has quite rightly noted that "like everybody else in the area I have found it incredibly frustrating that we have had to wait so long for this report... so I now hope that the contents of the inquiry will be made available as soon as possible.

"'The escalating cost of the inquiry has also been a matter of real concern to so many people, including me. Hopefully the contents of the report will provide some answers to why it has cost so much and I certainly welcome the government's commitment to try to minimise the cost of any similar inquiries in the future. But the important thing now is to know what the report contains and I hope the government will be able to make a statement on that as soon as possible."

In an answer to a private question by Richard Burden, the business minister Ian Lucas said that in the future the government would carefully consider any similar exercises so as to "minimise" costs.

As Jonathan Walker pointed out in his News blog yesterday, there could be a delay before the report is published as its findings will determine whether any further action is needed. If action is needed, then publication of the report might be considered prejudicial to that action.

Things are further complicated by the fact - as the Birmingham Mail notes today - that the Phoenix Four have said no money pledged to ex-workers from the MG Rover Trust Fund will be paid until the inquiry report is published. The Mail believes that around £16m piled up from the sale of dealerships and the Studley Castle conference centre is stuck in a bank account, delaying potential pay-outs to former employees.

Tata Motors, India's largest vehicle manufacturer and the firm that bought Jaguar Land Rover some 18 months ago, released its latest financial figures today. Its sister company Tata Steel (whose UK operation Corus announced 2000 job losses yesterday) has just reported a 60% fall in profits to just under £600 million.

Not surprisingly, given the dire state of the auto industry worldwide, there is plenty of red ink; indeed Tata Motors reported its first annual loss in eight years, a loss of 25.05 billion rupees ($520 million) against a profit of 21.68 billion rupees last year.

JLR itself recorded a net loss of £281 million ($463 million) in the 10 months of the 2009 fiscal year that it has been on Tata's books. That comes after a £327 million operating profit in 2007 and £310 million operating profit in the first half of 2008. Since then conditions have deteriorated and the firm has cut nearly 2000 jobs and brought in special sabbaticals on 80% pay for over 300 hundred staff.

As reported in today's Post (see here), there is renewed hope that LDV could yet be rescued, with a number of "very credible parties" bidding for LDV.

Names in the frame apparently include Malaysian group Westar, Indian group Mahindra and Mahindra, and Chinese car firm Nanjing, which bought Mg Rover's assets before itself being taken over by Shanghai Automotive. Other bidders may yet join the fray. The administrators have stated that there could "be some clarity around this within the next two to three weeks."

Not all bidders would aim to keep production in the UK. Whilst Westar have previously stated that they would aim to retain some production in Birmingham, other bidders may well look for a 'lift and shift' of assets and production out to India or the Far East.

New figures from the Society of Motor Manufacturers and Traders (SMMT) show that the number of cars assembled in the UK last month fell by 43% year-on-year. Dreadful as these figures sound, these are actually the best figures so far this year, and may suggest that the worst downturn ever seen in the car industry in the UK has bottomed out. We're NOT talking recovery, of course...

The same cannot be said for the commercial vehicle sector; here production fell by a disastrous 73.5%, with firms lacking the credit and confidence to buy vehicles.

Ever since demand fell off a cliff last autumn when the financial system imploded, car producers have rapidly scaled back output as stocks piled up. Part-time working, lay-offs and lengthy plant shut-downs have been the norm in the industry. With assembly plants shut down or on reduced shifts, the knock-on effect has been felt down the supply chain; the number of jobs lost in the industry runs to 30,000+ even excluding the LDV workers.

The US firm GM (recently renamed 'Government Motors' by some) is closing in on a deal to off load Saab, having already got shot of Hummer and Saturn, as it races to complete a restructuring whilst under Chapter 11 protection.

Swedish broadcaster SVT has reported that the Swedish luxury super car firm Koenigsegg was planning to buy Saab along with Norwegian investors.

Saab entered 'creditor protection' (a Swedish version of Chapter 11) back in February as GM sought to sell off the loss making brand, and the Swedish firm is trying to cut debts by 75% during this process. Saab confirmed last month that three bidders were interested in Saab and that they expected to complete the sale by the end of June.

Comments earlier this week by Tom Purves (see here), the boss of the luxury car firm Rolls-Royce, were interesting on a number of fronts...

Despite the global economic downturn, RR has received 1,500 'serious expressions of interest' in the new Ghost model which is set to be unveiled in September and launched next year. The Ghost model has generated much interest after a prototype has toured the globe. If these expressions of interest were translated into sales they could effectively double RR's annual sales.

It seems that firms - luxury brands included - can (and must) innovate and develop new products for new markets (witness the splendid Jaguar XF as well). In this sense, the new Ghost is critical for RR in extending its product range and moving into new markets. The model will especially aim at a lower price category and hence potential customers who would potentially go for a Bentley Continental Flying Spur instead.

The model could also appeal to the growing numbers of rich people in emerging markets such as Russia and China, even if 'mature' western markets move away from ostentatious displays of wealth, as some seem to suggest will happen post credit-crunch.

Whilst the UK has seen its production of heavy end commercial vehicles run down in recent years, light commercial vehicles are still made in the UK in significant numbers.

Yet that could well change over the next three years unless the UK government steps in, as the seismic changes that have unfolded in the world's auto markets threaten to wipe out mass van production in the UK, leaving only very small niche producers.

At the moment there are three main producers - Ford at Southampton, GM/Renault's joint venture at Luton, and LDV here in Birmingham. The latter has been in suspended animation since December when production was largely stopped as the double whammy of credit crunch and recession impacted.

If current trends continue, all three could effectively have gone by 2012, with all main van demand then having to be met by imports, and with jobs and capacity lost forever.

The key question for the UK government is: does it want a van industry in the UK? If so, it needs to step in with an industrial policy that can make that happen. LDV is a good place to start.

In one of America's largest ever bankruptcies, GM is expected to declare itself bankrupt tomorrow, in an attempt to seek protection from creditors after stacking up over $80bn of losses in the last 4 years.

The firm has also swallowed some $20 billion in cash from the Obama administration and is likely to need another $30 billion before emerging from Chapter 11 substantially slimmed down, and free of debts. During Chapter 11, the firm will continue to function and assemble cars, and a judge will make the decisions on who gets what assets.

Whilst the old saying that 'whatever's good for GM is good for the US economy' may no longer be true (if it ever was) and GM is no longer the biggest car maker in the world, by some estimates it still accounts for 1% of the US economy. The bankruptcy then is not only hugely symbolic of the fate of the US car industry, but matters profoundly for the workers, suppliers, dealers and creditors caught up in its travails.

LDV is back in court tomorrow hoping to withdraw its application for administration. After a last-gasp £5million intervention by the government (well done, Liam Byrne) to buy critical time for the Malaysian firm Weststar to look over LDV's books and hopefully buy the firm, hopes are rising that production will re-start this summer once the takeover is completed.

Readers won't need reminding that the van maker ceased production back in December after the double whammy of recession and credit crunch hit the commercial vehicle market, and LDV's Russian owner Gaz ran into its own financial troubles.

Critically, Weststar appears to want to maintain production at LDV's Washwood Heath plant, and also to expand manufacturing in Malaysia (where so far Weststar has imported Maxus van components and assembled them for Asian markets).

LDV employs around 850 workers at its plant, with another 1200 in dealerships. Several thousand more in the supply chain depend on the firm, although it isn't clear how many of these have already lost their jobs in the savage downturn affecting the industry and given that LDV hasn't made a van in months.

Tomorrow thousands of workers are expected to join a march in Birmingham to send a clear message to the government that protecting jobs must be the top priority as the double whammy of recession and credit crunch continues to bite.

The "Unite for Jobs" march will bring together key figures from business, academia and politics to spell out the case for government action to protect jobs, especially in the manufacturing sector.

I didn't think I'd ever see the former CBI chief and trade minister Digby, Lord Jones of Birmingham marching alongside the joint general secretaries of Unite, Tony Woodley and Derek Simpson. Yet there they will be, at the head of the march, spelling out the need for government action.

I'll be going along as I think Digby, Tony, Derek and many others have a very strong case to make. In recent blogs I've been stressing the need to support not only JLR and the auto sector, but also manufacturing more generally.

There are very good reasons for doing so, as one day (we don't know when) this recession will be over, and we will need a strong manufacturing exports sector to drive growth. Financial services, consumers, property and construction will recover but they won't quite drive growth in the way that they did before. Manufacturing will matter.