Jaguar Land Rover will reduce its dependence on Ford engines with a new low emission engine manufacturing facility in the UK.

The company announced that it would spend around £355 million on the new facility to manufacture 4-cylinder petrol and diesel engines near the British city of Wolverhampton. It will create around 750 direct jobs, and an additional 1,000 through the supply chain.

“Expanding our engine range will help us realise the full global potential of both our Jaguar and Land Rover brands,” said Dr Ralf Speth, Chief Executive of JLR.

It is part of a wider plan to invest around £1.5 billion a year over the next five years, and complete 40 new product actions within that period, stepping up competition with its German auto-making rivals.

Ford engines

JLR engines have been supplied by two of Ford's factories in Bridgend and Dagenham in the UK. The company said that Ford will continue to supply the V8 and V6 diesel and petrol engines for the company, and that the relationship with Ford would continue for several years.

Analysts said that in addition to cost savings in the longer term, manufacturing its own engines will help JLR keep pace with rapidly rising demand in the future and prevent bottlenecks that have occurred in the past.

Says Mr Ashvin Chotai, Managing Director of London-based consultancy Intelligence Automotive Asia Ltd, the dependence on engines supplied from Ford proved a “major constraint to more rapid growth” in the past couple of years, when demand from both the US and China was booming.

While more muted demand in the US and Europe currently mean that it is less of a constraint this year, longer term it's a matter the company has to address, he says. “It was clearly on the cards though has happened sooner than expected,” he added. “If they design it right it will enhance their brand image,” he added.

At Frankfurt

Last week, JLR unveiled three new cars at the Frankfurt autoshow – a concept hybrid sportscar, the C-X16, the DC100 concept car, which updates the classic Defender and the DC100 Sport.

The new site will strengthen the Tata Group's position as the largest manufacturing employer in the UK. The move was welcomed by the Government, which is giving the firm £10 million in investment support. The plant will be based in the i54 Business Park, which is one of the government's enterprise zones, designed to attract businesses to new parts of the country. “This announcement sends out strong signals to potential inward investors across the world,” said Business Secretary, Dr Vincent Cable.

Sales resilient

Jaguar Land Rover sales have continued to show resilience despite the weakness in the economies of Europe and the US. Sales of JLR for August were 31 per cent higher than a year ago, driven by demand in markets such as China.

Last year, the company scrapped plans to close one of its manufacturing facilities, while in the year to date JLR has hired an additional 3,000 people, including 1,000 engineers.

Related Topics
comment COMMENT NOW