PSA takeover of Jaguar Land Rover: would it strengthen the British carmaker?

French motoring giant PSA (Peugeot Societe Anonyme) is on the brink of acquiring British car conglomerate JLR (Jaguar Land Rover), according to reports.

The Press Association claims to have seen a “post-sale integration document” passed around senior executives from both firms that outlines the benefits of a possible merger.

The leaked document highlights potential cost cuts that could take place after the merger and suggests that the sale “could be imminent”, reports Automotive News Europe.

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According to Auto Express, an insider at JLR told PA that “things are moving quickly behind closed doors”.

“Just look at how close the two firms are in the UK - the two head offices in Coventry [PSA] and Gaydon [JLR] are just 25 miles apart and both firms make cars in the UK,” the source said.

What do the companies say?

Indian engineering giant Tata, which owns JLR, has denied that the British carmaker is for sale.

“As a matter of policy, we do not comment on media speculation. But we can confirm there is no truth to these rumours,” the company said in a statement.

Meanwhile, a spokesperson for PSA said that the car giant is “no hurry” to purchase JLR or any other manufacturer, but added that the French motoring group would be “open to all opportunities that would create value on a long-term basis”.

The company has not been shy about expressing its desires to introduce more carmakers to its extensive portfolio, which includes Peugeot, Citroen and Vauxhall.

In an interview with Autocar India last month, PSA chief Carlos Tavares said that he would be open to acquiring JLR “as long as it’s not a distraction”.

Although Tavares said there had been no discussions with JLR and Tata executives about an acquisition at that time, he confirmed that PSA was interesting in adding a luxury brand to its portfolio and would be “considering all opportunities”.

Could PSA ownership benefit JLR?

Possibly. PSA has already had an impact on Vauxhall since acquiring the carmaker in 2017.

Last year, Vauxhall posted profits for the first time since 1999 - only 12 months after PSA bought the company from US car giant General Motors, Autocar reports.

Vauxhall recorded operating profits of €502m (£433m) in the first half of 2018, a considerable jump from the $257m (£222m) during the same period in 2016.

The rumoured PSA takeover could prove equally beneficial for JLR.

The British carmaker’s sales performance has “stuttered” in recent months, The Guardian reports. Vehicle sales fell by 6.4% during the final three months of 2018, following a 40% fall in sales in China.

In January, JLR announced a £2.5bn cost-cutting scheme that resulted in the firm “shedding 10% of its workforce”, equating to around 4,500 jobs, The Daily Telegraph reports. The firm subsequently posted losses of £3.4bn for the last three months of 2018 - its third consecutive lossmaking quarter.