12:25 pm, May 9, 2019
LEAKED information suggests a sale of struggling Jaguar Land Rover to French automotive group PSA 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-saving benefits after a tie-up.
A spokesman for PSA – owner of Peugeot, Citroen, DS and Vauxhall – told the Press Association that the firm was in ‘no hurry’ to make acquisitions and could ‘stand alone’.
However, despite denying the rumour, spokesman Pierre-Olivier Salmon added: ‘We are generating the cashflow necessary to pay for our future. If an opportunity comes, like Opel (Vauxhall), we will consider it.’
PSA chairman Carlos Tavares has made no secret of his desire to either merge or acquire struggling UK-based luxury car manufacturer JLR.
During an interview with Autocar India in April, he said he believed it would be good for PSA to have a luxury brand and that the company was ‘considering all opportunities’.
Both companies have denied the latest rumours, but sources inside JLR have told the Press Association that despite public statements, ‘things are moving quickly behind closed doors’.
One insider, who has seen the integration paperwork, said: ‘To have a document like this in circulation at the two firms points to the fact things are very far down the line with either a sale or acquisition.
‘Just look at how close the two firms are in the UK – the two head offices in Coventry and Gaydon are just 25 miles apart and both firms make cars in the UK. There are plenty of ways the two companies could save money by working together.’
Automotive industry expert Professor David Bailey of the Birmingham Business School believes the tie-up could be a good fit for both brands.
He said: ‘PSA said last month it was interested in acquiring JLR but [its owner] Tata publicly ruled out a sale. Tata shareholders’ patience may be wearing thin, though, given recent JLR losses. A partial sale may be an option.
‘I’m sceptical about JLR being able to go it alone bearing in mind the need for very high research and development spend on new technology, given that the auto industry will transform itself in the coming years towards connected, autonomous electric cars.
‘At some point JLR may have to collaborate with another auto firm. A partial PSA stake might open that up.’
Tata Motors – 100 per cent owner of JLR – said ‘there was no truth to rumours that Tata Motors is looking to divest its stake in JLR’.
Jaguar Land Rover has been struggling in recent months, making redundancies across its business and cutting back production at its plants.
In February it revealed a hefty quarterly loss of £273m in the three months to December 31, 2018, blaming Brexit uncertainty and slowing demand in China. It also wrote down the value of its plants and other assets, posting a £3.4bn loss for the quarter overall.
PSA, meanwhile, has been flourishing since it bought Vauxhall in 2017. It has returned the struggling brand to profit in less than two years and is cash-rich with revenue up 18.9 per cent in 2018 to £63.7m.
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