N DECEMBER 2008, David Smith, the Jaguar Land Rover chief executive, said the UK car industry was facing a "national emergency" and required "urgent action" as car sales fell 33pc year–on–year.
Behind the scenes, Smith was warning Lord Mandelson, the then Business Secretary, that thousands of jobs would be lost if the Government did not provide financial support.
That aid never came from Lord Mandelson, despite face–to–face talks with Ratan Tata and support from Gordon Brown, the Prime Minister.
However, two years on, the only loser from that decision appears to be the taxpayer. JLR has just posted record–breaking annual profits of more than £1bn on revenues of almost £10bn.
Without a bail–out, the turnaround has been driven by the commitment of JLR's foreign parent, the quality of its 17,000–strong British workforce, and booming, emerging markets.
After rejecting Lord Mandelson's condition–laden proposal, Tata set about securing £500m of commercial finance for JLR while pouring in £1bn of its own cash to prop up the company and to maintain investment in research and development. Since 2009, it has invested £1bn a year in R&D and plans to continue that spending for the next five years.
The new JLR chief executive Ralf Speth said yesterday this investment will lead to "the most ambitious product development programme in the history of the brands". It has already helped to yield cutting–edge projects such as the Range Rover Evoque and CX–75 hybrid supercar.
But while the cash has come from India, the expertise has come from Britain. JLR has a workforce of 17,000 staff at three manufacturing plants and two R&D bases in Britain.
Tata, unlike other foreign owners, has committed JLR to the UK because it recognises the importance of British heritage to the brands and – despite recent comments, by chairman Ratan Tata about the commitment of British managers – it also recognises the quality of British engineers.
Before Tata arrived, JLR's workforce had laid the foundations for future success with models such as the Jaguar XK and XF, through famed designer Ian Callum, and the modernisation of Land Rover. In 2007, under Ford ownership, JLR secured its record sales – 292,000 cars – still 20pc greater than the latest annual results.
Tata has supported this team with two key appointments – Carl–Peter Forster, former boss of GM Europe who is now Tata Motors chief executive, and the highly–rated Speth – who have brought fresh ambition to JLR.
"Please do not think that the product development programme is only down to new management," Forster said yesterday. "We have a very strong team around us."
Tata's investment and the progress of the workforce has been rewarded with surging sales in the booming economies of the East. In China and India, the growing middle classes aspire to own Jaguar and Land Rover cars. In March this year, Land Rover sales rose 33pc in China and 61pc in India, while Jaguar enjoyed a 70pc rise in Russia. For the entire business, China now accounts for 11pc of sales and Russia 5pc.
This growth means JLR was last year able to scrap plans to close one of its three UK plants, and is now considering an engine plant to help deal with the soaring demand.
The company faces significant challenges in the future, such as rising raw material costs and competition from larger German rivals such as BMW, who still sell more in a quarter than JLR does in a year.
But the progress in emerging markets and the prospect of 40 new models – including a small Jaguar – means JLR can move forward with optimism.
Howard Wheeldon, senior strategist at BGC Partners and an automotive analyst, said: "Without doubt JLR is now very firmly back on the international premium car market map and my hope is that what we see now may only be the start."