Sukhoi SuperJet Disappears During Indonesia Demo Flight

By Yudith Ho and Andrea Rothman - May 10, 2012 6:01 AM GMT+0700

The search continued for a Russian Sukhoi SuperJet 100 that vanished from radar screens during a brief promotional flight in Indonesia yesterday with 50 people on board, as poor weather complicated the rescue effort.

Indonesia’s National Search & Rescue Agency deployed more than 100 people to track down the aircraft that disappeared in the afternoon in West Java. Helicopters were forced to abort an earlier mission and will resume their search today. Sukhoi representatives said they were heading for Jakarta to support the effort, along with Russia’s Ministry of Industry & Trade.

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Relatives of passengers on the ill-fated Russian Sukhoi Superjet 100 grieve at the arrival area of Halim airport in Jakarta on May 9, 2012. Photographer: Romeo Gacad/AFP/GettyImages

The twin-engine aircraft, which can carry about 100 people, lost contact after descending to 6,000 feet (1,828 meters) on its second flight of the day during a promotional tour of Asian countries. The SuperJet, developed with support and equipment of Western partners, is the spearhead in Russia’s attempt to revive the nation’s aerospace industry and modernise the fleet following the 1991 collapse of the Soviet Union.

“I cannot say that it has crashed,” Daryatmo, head of the Search and Rescue Agency, said at a press briefing at Halim Perdana Kusumah airport. “What we can say at the moment is that it has lost contact.” .

The terrain in the West Java province reaches 10,000 feet around the peak of the Ciremai volcano. The Sukhoi had taken off from the Halim Perdana airport as part of a tour of Asia that had included previous stints to Myanmar, Pakistan and Kazakhstan. Further appearances were planned in Laos and Vietnam, Olga Kayukova, a spokeswoman for Sukhoi owner United Aircraft Corp., said by telephone.

Proper Condition

The aircraft has an operating range of as much as 4,578 kilometers (2,845 miles) and is a challenger to similar-sized jets from Bombardier Inc. (BBD/B) and Brazil’s Embraer SA. (EMBR3) Sukhoi said the jet used in Jakarta had gone through the “full pre-flight check” and displayed the “proper technical condition.”

The second demonstration flight for the day followed a first tour that had gone “without any technical problems,” Sukhoi said in a statement on its website. Commanding the jet were a “very experienced crew” consisting of Chief Test Pilot Alexander Yablontsev and co-pilot Alexander Kochetkov, it said.

The Sukhoi SuperJet carried 42 passengers and eight crew, Sunaryo, an official from PT Trimarga Rekatama, said at a press conference yesterday in Jakarta. Trimarga Rekatama is Sukhoi’s agent in Indonesia.

Prone to Accidents

The SuperJet was developed in a venture with Finmeccanica SpA (FNC)’s Alenia Aeronautica SpA, which is helping market the plane. Russia’s aviation industry has sought to overcome the image of outdated aircraft prone to accidents. Last year, the country suffered 99 deaths after five jetliner accidents through late September, according to the most recent figures available from researcher Ascend Worldwide Ltd.

Following an accident last year when a plane carrying the Lokomotiv Yaroslavl hockey team failed to gain altitude, then- President Dimitry Medvedev said Russia might turn to foreign aircraft producers to ensure safety of air travel.

The age of Russia’s domestically manufactured single-aisle aircraft fleet is between 25 and 30 years, while the U.S. fleet averages around 13 years, according to figures published late last year by Ascend, a London-based aviation consultant company.

“It’s a setback, but we don’t know anything about the causes yet,” said Richard Aboulafia, vice president of the Teal Group, an aviation forecaster in Fairfax, Virginia. “Russia’s jetliner industry completely lost its competitiveness after the Cold War and shrank to almost nothing.”

Muted Interest

Customers for the SuperJet included Armenia’s Armavia and Russia’s flagship airline OAO Aeroflot, and the eight aircraft in service for two carriers have accumulated more than 3,500 flights. PT Sky Aviation, an Indonesian carrier, has ordered 12, and the Asian tour was an attempt to raise the aircraft’s profile with prospective customers.

While European carriers including Air France-KLM Group and Deutsche Lufthansa (LHA) AG initially said they were studying the plane, neither has so far placed orders. The SuperJet’s main competitors are the CRJ900 built by Bombardier and the E175 and E190 models by Embraer.

Seating five abreast, the plane is powered with engines built by PowerJet, a joint venture between French engine maker Snecma, a unit of Safran SA (SAF), and NPO Saturn. Safran’s Messier- Dowty unit also provides the integrated landing gear system, with B/E Aerospace providing the doors. Italy’s Avio provides the gearbox for the propulsion systems and Safran’s Aircelle unit provides the engine nacelles.

Development and capital costs were about $1 billion, according to Fairfax’s Teal, with another $1 billion for the engines and customer support. The list price is $28 million. The aircraft had 170 orders in total, according to Teal. Sukhoi itself has not disclosed order numbers.

To contact the reporters on this story: Yudith Ho in Singapore at yho35@bloomberg.net; Andrea Rothman in Paris at aerothman@bloomberg.net

To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net; Neil Denslow at ndenslow@bloomberg.net

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Greece Euro-Exit Debate Goes Public

By James G. Neuger - May 10, 2012 5:01 AM GMT+0700

From the monetary fortress of the European Central Bank to the pro-European duchy of Luxembourg, policy makers are beginning to air their doubts that Greece can stay in the euro.

Post-election tumult in Athens has put the once-taboo subject of an exit from the 17-country currency union on the agenda, lifting the veil on possible scenario planning afoot behind the scenes.

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The euro fell for the eighth day as it dawned on investors that Greek voters’ revolt against austerity, and not the victory of Socialist Francois Hollande in France, was the more significant of the two national elections in the EU on May 6. Photographer: Simon Dawson/Bloomberg

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May 10 (Bloomberg) -- Stephen Roach, a professor at Yale University and former non-executive chairman for Morgan Stanley in Asia, talks about the global economy and Europe's sovereign debt crisis. He speaks from Connecticut with Susan Li on Bloomberg television's "First Up." (Source: Bloomberg)

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May 10 (Bloomberg) -- Elena Panaritis, a former Greek member of parliament for the socialist Pasok party, talks about the outlook for the nation's debt crisis and possible exit from the euro zone. Post-election tumult in Athens has put the once-taboo subject of an exit from the 17-country currency union on the agenda, lifting the veil on possible scenario planning afoot behind the scenes. Panaritis speaks from Athens with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

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May 9 (Bloomberg) -- Riccardo Barbieri, chief European economist at Mizuho International Plc, talks about European Union fiscal cooperation and the prospects for another round of Greek elections in June. He speaks with Manus Cranny on Bloomberg Televisions's "Last Word." (Source: Bloomberg)

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May 9 (Bloomberg) -- Robert Jukes, global strategist at Collins Stewart Wealth Management, discusses global investment strategy and controls against portfolio risk. He speaks with Linzie Janis and Mark Barton on Bloomberg Televisions's "Countdown." (Source: Bloomberg)

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May 9 (Bloomberg) -- Bank of Italy Director General Fabrizio Saccomanni talks about Greece's bailout terms and the outlook for the Italian economy. He speaks with Bloomberg Television's David Tweed in Florence, Italy. (Source: Bloomberg)

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A German activist, member of the Frankfurter 'Occupy Public Space,' outside the German embassy in Athens protesting 'against the austerity and debt politics in the EU forced by the German government'. Photographer: Simela Pantzartzi/EPA/Landov

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Alexis Tsipras, center, leader of Greece's radical left coalition SYRIZA, leaves Greek President Karolos Papoulias' office in Athens on May 8, 2012. Photograph: Kyodo/Landov

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Wolfgang Schaeuble, Germany's finance minister. Photographer: Jock Fistick/Bloomberg

“If Greece decides not to stay in the euro zone, we cannot force Greece,” German Finance Minister Wolfgang Schaeuble said at a conference sponsored by German broadcaster WDR in Brussels yesterday. “They will decide whether to stay in the euro zone or not.”

After 386 billion euros ($499 billion) in aid pledges for Greece, Ireland and Portugal, 214 billion euros in ECB bond purchases and another trillion euros in low-interest loans for banks, plus 17 high-level crisis summits, Greece’s political chaos thrust Europe into a perilous new phase.

The world is witnessing an “important moment in European Union history, a moment of crisis,” EU President Herman Van Rompuy said in Brussels on the 62nd anniversary of the declaration by Robert Schuman, then France’s foreign minister, that launched postwar European integration.

Euro’s Drop

The euro fell for the eighth day as it dawned on investors that Greek voters’ revolt against austerity, and not the victory of Socialist Francois Hollande in France, was the more significant of the two national elections in the EU on May 6.

Bonds of at-risk countries have suffered since the balloting. Spain’s extra 10-year yield over German levels widened to 456 basis points from 415 at the end of last week. Italy’s widened to 408 basis points from 385 over the same timespan. The euro bought $1.2950 at 6:15 p.m. in Brussels, bringing its eight-day loss to 2.4 percent.

“Politically speaking, Greece is already out of the euro zone,” Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, said in an e-mailed note. “The only question is about the timing and disorderliness of its exit.

The Greek parties running on an austerity-for-rescue platform took one-third of the vote. Top vote getter Antonis Samaras failed to assemble a government, throwing in the towel after a few hours. Second-place finisher Alexis Tsipras of the Syriza party began coalition talks with an ultimatum to would-be partners to renounce support for the bailout.

‘Catastrophic Uncertainty’

The response outside Athens left little room for maneuver. Schaeuble said that fiddling with the bailout terms would unleash ‘‘catastrophic uncertainty’’ in financial markets, and the central bank’s verdict came from his former deputy, Joerg Asmussen.

‘‘Greece has to be aware that there is no alternative to the agreed consolidation program if it wants to remain a member of the euro zone,’’ Asmussen, who last year moved from the German Finance Ministry to the ECB board, told Handelsblatt in an interview published yesterday.

With polls showing roughly the same proportion of Greeks wanting to stay in monetary union while opposing austerity, the haggling over the future government and possible elections next month put the country before two incompatible options.

‘Very Painful’

‘‘If 80 percent of Greeks want to stay in the euro, then I think they have to support parties that are in favor of this policy of staying in the euro,’’ Luxembourg Foreign Minister Jean Asselborn said at the Brussels conference. Otherwise ‘‘comes the point where Greece unfortunately has squandered the opportunity and that will be very, very painful for the people.’’

European treaties label the euro ‘‘irrevocable’’ and provide no legal procedure for a country to leave or be thrown out. A December 2009 study by the ECB’s legal department deemed an ouster or departure ‘‘so challenging, conceptually, legally and practically, that its likelihood is close to zero.’’

Europe’s crisis managers put the odds at zero until last November, when German Chancellor Angela Merkel and French President Nicolas Sarkozy turned a planned Greek referendum on austerity into an in-or-out vote on Greece’s euro future.

The referendum was dropped and the Greek leader who mooted it, George Papandreou, was out within days. A nonpartisan government led by former ECB Vice President Lucas Papademos took over. Unlike Italy, which got a technocratic government at the same time, Greek politicians gambled on early elections.

Re-Vote

With the coalition talks in Athens at risk of stalemating, another vote may come as soon as next month.

Merkel’s first finance minister, Peer Steinbrueck, questioned whether a new election would yield a functioning government with the mandate to deliver the additional savings demanded by international donors.

Greece may be mired in ‘‘a fragile, virtually paralyzed situation for months,” Steinbrueck, a potential challenger to Merkel in Germany’s 2013 election, said at the Brussels conference.

The next Greek ballot “will be a referendum on continued euro membership,” said John Stopford, co-head of fixed income and currency in London at Investec Asset Management, which oversees about $90 billion. “As last week’s election shows, it’s going to be a close-run thing.”

To contact the reporter on this story: James G. Neuger in Brussels at jneuger@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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Dow Falls 6th Day in Longest Slump Since August on Greece

By Rita Nazareth - May 10, 2012 4:17 AM GMT+0700

The Dow Jones Industrial Average (INDU) declined for a sixth straight day, the longest losing streak since August, amid concern Greece’s debt crisis is worsening as the nation struggles to form a coalition government.

Equities trimmed losses as Europe’s bailout fund said it will pay the next installment of aid to Greece. General Electric Co. (GE) and JPMorgan Chase & Co. (JPM) slid more than 1.7 percent to pace declines among the largest companies. Macy’s Inc. (M), the owner of its namesake department stores, slumped 3.7 percent as its profit forecast for this year trailed projections. Walt Disney Co. (DIS) advanced 1.6 percent, to an all-time high, after the world’s largest entertainment company said earnings surged 21 percent.

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Stocks pared losses as the European Financial Stability Facility’s Board of Directors confirmed the release of 5.2 billion euros ($6.7 billion) from a first installment of 39.4 billion euros by the end of June. Photographer: Richard Drew/AP Photo

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May 9 (Bloomberg) -- Bloomberg's Deborah Kostroun reports on the performance of the U.S. equity market today. The Dow Jones Industrial Average declined for a sixth straight day, the longest losing streak since August, amid concern Greece’s debt crisis is worsening as the nation struggles to form a coalition government. (Source: Bloomberg)

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May 9 (Bloomberg) -- Bloomberg’s Betty Liu, Adam Johnson and Matt Miller report on today’s ten most important stocks including Macy's, Metro PCS and Cisco. (Source: Bloomberg)

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May 9 (Bloomberg) -- Bloomberg’s Adam Johnson reports on the seasonality charts of the S&P 500, oil and economic surprise index. (Source: Bloomberg)

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May 9 (Bloomberg) -- James Swanson, chief investment strategist at MFS Investment Management, and Frederick Lane, vice chairman for investment banking at Raymond James Financial, talk about their investment strategies. They speak with Betty Liu and Adam Johnson on Bloomberg Television's "Street Smart." (Source: Bloomberg)

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May 9 (Bloomberg) -- Dean Curnutt, chief executive officer of Macro Risk Advisors LLC, talks about Federal Reserve policy, market conditions and volatility. He speaks with Tom Keene on Bloomberg Television’s “Surveillance Midday.” (Source: Bloomberg)

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May 9 (Bloomberg) -- Abhay Deshpande, portfolio manager at First Eagle Investment Management, talks about strategy and stock picks. He speaks with Scarlet Fu on Bloomberg Television's "InBusiness." (Source: Bloomberg)

The Standard & Poor’s 500 Index fell 0.7 percent to 1,354.58 at 4 p.m. New York time, a two-month low. The Dow slid 97.03 points, or 0.8 percent, to 12,835.06. It had the longest slump since Aug. 2, three days before S&P stripped the U.S. of its AAA credit rating. About 7.8 billion shares changed hands on U.S. exchanges, or 18 percent above the three-month average.

“It’s a tense situation in Greece,” John Carey, who helps oversee about $220 billion at Pioneer Investments in Boston, said in a telephone interview. “The elections in Europe opened up the possibility of a new look at bailout packages. That’s tough to analyze and uncertainty as always troubles investors.”

Global stocks fell as Greece’s political turmoil looks set to enter a fourth day with coalition talks deadlocked. The standoff has reignited concerns over its ability to hold to the terms of its two bailouts negotiated since May 2010. With Parliament split and policy makers in Berlin and Brussels urging Greece to stay the course, the country at the epicenter of the debt crisis is again facing the risk of an exit from the euro.

5.2 Billion Euros

Equities pared declines as the European Financial Stability Facility’s Board of Directors confirmed the release of 5.2 billion euros ($6.7 billion) from a first installment of 39.4 billion euros by the end of June.

Some investors also said the market trimmed losses as the S&P 500 traded near 1,350 (SPX), a support level for traders. Peter Jankovskis, at Oakbrook Investments, said that equities could resume their rally with positive developments in Europe. The index has risen 7.7 percent in 2012 amid better-than-estimated corporate profits. About 70 percent of S&P 500 companies that reported results since the start of the earnings season have topped projections, according to data compiled by Bloomberg.

“Corporate earnings have continued to be good,” Jankovskis, who helps manage $2.9 billion, said in a telephone interview from Lisle, Illinois. “There’s reason to be encouraged about American stocks.”

Volatility Jumps

Concern about Europe’s debt crisis helped drive the S&P 500 down 3.1 percent in May. All 10 groups in the benchmark gauge retreated today. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, surged 5.4 percent to 20.08, the highest level since April 10.

The Dow Jones Transportation Average, a proxy for the economy, lost 1.4 percent. FedEx Corp. (FDX), the operator of the world’s biggest cargo airline, slid 2.1 percent to $87.13. GE decreased 1.8 percent to $18.91. The KBW Bank Index (BKX) dropped 1.6 percent. JPMorgan sank 1.8 percent to $40.64.

Moody’s Investors Service will this month start cutting the credit ratings of more than 100 banks, a move that risks pushing up their funding costs and forcing them to curb lending in a threat to economic growth.

BNP Paribas SA, France’s biggest lender, Deutsche Bank AG, Germany’s largest, and New York-based Morgan Stanley are among firms that face having their short- and long-term debt downgraded to their lowest-ever levels by Moody’s, the ratings company said in February.

Macy’s Slumps

Macy’s declined 3.7 percent to $38.05. The company repeated its forecast that profit this year would be $3.25 to $3.30 a share. Analysts estimated $3.39, on average.

Carlyle Group LP (CG) sank 1.1 percent to $21.75, slumping below the $22 offering price in its fifth day of trading, following a discounted IPO with which the firm sought to prove that shares in private-equity managers can rise.

Disney rose 1.6 percent, the most in the Dow, to $45.02. The record weekend opening of “Marvel’s The Avengers,” while not a factor in the second quarter ended March 31, was a focus of yesterday’s conference call with analysts. Disney is working on a sequel, racing to get more “Avengers” merchandise in stores and plotting to get the characters in its parks.

A measure of homebuilders in S&P indexes rallied 2.6 percent. Prices for single-family homes climbed in half of U.S. cities in the first quarter as real estate markets stabilized.

Merger Talks

MetroPCS Communications Inc. (PCS) surged 14 percent, the biggest gain in the S&P 500, to $7.50. Deutsche Telekom AG is discussing a merger of its T-Mobile USA unit with MetroPCS as it reviews options for the customer-losing business, according to people familiar with the matter.

Avon Products Inc. (AVP) gained 9.3 percent to $21.60 after JAB Holdings B.V. announced plans to sell 36 million shares of Reckitt Benckiser Group Plc to fund investments, including its proposed acquisition of Avon.

Dean Foods Co. (DF) rose 11 percent to $14.15. The biggest U.S. dairy processor boosted its full-year forecast, saying it now expects to earn at least $1.10 a share. Analysts, on average, estimated 95 cents.

U.S. stocks are less than expensive regardless of the price-earnings ratio used to value them, said Richard Bernstein, chief executive officer of Richard Bernstein Advisors LLC.

Ratio Comparison

A comparison of the S&P 500’s multiple to earnings from the previous four quarters along with a ratio, compiled by Yale University Professor Robert J. Shiller, that’s based on 10 years of income, put the index’s value at respectively 13.8 times and 22.2 times profit.

“The market looks at worst reasonably valued, at best downright cheap,” Bernstein said in an interview with Robert Huebscher, founder and CEO of the Advisor Perspectives website, that was published yesterday.

Both price-earnings indicators look “better than normal” after taking interest rates into account, he said. The average yield on 10-year Treasury notes has fallen to 2.01 percent this year from 2.76 percent for all of last year, according to data compiled by Bloomberg.

P/E ratios are poised to rise, he said during the April 30 interview, as economic weakness in Europe and slower growth in emerging markets spur demand for U.S. assets.

“People are underestimating the risk outside the U.S. and overestimating the risk inside it,” said Bernstein, based in New York. “Over the next several years, there is going to be a reevaluation of those risks, and we should get higher multiples in the U.S.”

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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Jaguar F-Type Revisits Swinging ‘60s to Challenge Porsche: Cars

By Steve Rothwell - May 9, 2012 7:35 PM GMT+0700

Jaguar is invoking its iconic E-Type roadster to challenge Mercedes-Benz and Porsche with its first two-seat sports car in almost four decades.

The F-Type, due to be unveiled in September and go on sale as soon as next April, will be Jaguar’s smallest auto in more than a half-century as the marque seeks a return to its sporting tradition following decades spent focusing on luxury sedans.

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Jaguar says the F-Type, a production version of its C-X16 concept car, seen here, minus the hybrid engine, is more than just a marketing ploy, and that the model will make money. Photographer: Jason Alden/Bloomberg

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May 9 (Bloomberg) -- The Jaguar C-X16 concept sports car is seen in a promotional video from Jaguar Land Rover Plc. The company's F-Type production roadster, due to be unveiled in September, is based on the C-X16. (Video courtesy of Jaguar Land Rover Plc. Source: Bloomberg)

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May 9 (Bloomberg) -- Bloomberg's Betty Liu and Dominic Chu report that Jaguar is invoking its iconic E-Type roadster to challenge Mercedes-Benz and Porsche with its first two-seat sports car in almost four decades. They speak on Bloomberg Television's "In The Loop." (Source: Bloomberg)

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The E-Type, seen here, introduced at the 1961 Geneva Motor Show, was described by Ferrari founder Enzo Ferrari as “the most beautiful car ever built,” and became synonymous with the London of the “Swinging Sixties.” Source V&A via Bloomberg

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Beijing auto show attendees walk past a large poster for a Jaguar automobile. Photographer: Nelson Ching/Bloomberg

“If the product can do what the original E-Type did for Jaguar, it will be a huge boost,” said Peter Schmidt, managing director of Warwick, England-based Automotive Industry Data. “What they’re doing is laudable, it’s good for the brand and it’s good for the image. But nobody should expect miracles.”

The E-Type, introduced at the 1961 Geneva Motor Show, was described by Ferrari founder Enzo Ferrari as “the most beautiful car ever built,” and became synonymous with the London of the “Swinging Sixties.” Yet it has taken the $2.5 billion purchase of Jaguar by India’s Tata Motors Ltd. (TTMT) in 2008 for a pure-bred sports model to return to favor at the British manufacturer.

Tata, which acquired the Jaguar and Land Rover brands from Ford Motor Co. and combined them into a single unit, plans to invest $12 billion over five years to win a bigger slice of an upscale market dominated by German automakers.

Tata Motors fell 1.2 percent to 292.85 rupees in Mumbai trading today. The shares have still advanced 64 percent this year, exceeding gains of 30 percent for Bayerische Motoren Werke AG (BMW), 18 percent at Volkswagen AG (VOW), parent of luxury carmaker Audi, and 13 percent at Daimler AG (DAI), which owns Mercedes-Benz.

‘Twin Job’

Jaguar says the F-Type, a production version of its C-X16 concept car minus the hybrid engine, is more than just a marketing ploy, and that the model will make money.

“We’re too small a company for it not to be a viable business proposition,” spokesman Angus Fitton said. “It’s got to pay for itself and generate profit, but it has got to do a twin job in that it will be a brand-building job as well.”

Jaguar has yet to say how much the F-Type will cost, though the “speculated price” for the first variant, a convertible, is about 55,000 pounds ($89,000), putting it in a niche where there’s little overlap with competitors’ models and helping to reduce the average age of Jaguar’s customer base, Fitton said.

The third generation of Porsche AG’s Boxster roadster went on sale in Germany last month at 48,300 euros ($62,800), while the Carrera Cabriolet, the cheapest convertible version of the Stuttgart-based company’s 911 model, sells for 100,500 euros.

Three Models

The F-Type will also sit between the Mercedes SLK compact roadster, which costs 38,700 euros, and the Daimler brand’s new SL, available in Europe from March 31 and priced from 93,500 euros, as well as the 31,500-euro TT Roadster and 123,200-euro R8 Spyder from VW’s Ingolstadt-based Audi. BMW’s only two-seat convertible is the 36,400-euro Z4.

Jaguar’s current lineup is based on three models, two of them sedans, with the XJ positioned to compete with the BMW 7- Series and Mercedes S-Class and the mid-range XF an alternative to the 5-Series and E-Class from the two German companies.

The third model, the XK, is available as a four-seat convertible for 99,400 euros and was regarded as the closest thing to an E-Type successor when it was introduced in 1996 to replace the XJS, which itself ousted the 1960s icon in 1975.

The F-Type will be made at Jaguar’s Castle Bromwich plant near Birmingham, England. The company, which currently operates from three U.K. sites, said March 21 it had agreed to form a venture with Chery Automobile Co. Ltd. to build cars in China.

The new model will come with a 3-liter supercharged V6 engine tuned to either 335 or 375 horsepower and later with a 5- liter V8, according to Fitton. With a top speed of 155 miles per hour, it will only be produced in a two-seat layout.

Production Plans

While that may help restore Jaguar’s sporting credentials established with the 100-mph SS100 in 1938 and buoyed by seven victories in the Le Mans 24 Hour Race with models including the C-Type and D-Type, the F-Type won’t deliver the volumes needed for the part-sharing and economies of scale required to compete with larger manufacturers, said Garel Rhys, director of Cardiff University’s automotive industry research center.

BMW, the Munich-based luxury-car leader, boosted deliveries 13 percent last year to 1.38 million cars and sport-utility vehicles, while Audi ranked second with 1.3 million autos and Stuttgart-based Mercedes-Benz placed third with 1.26 million.

SUV-Led

Jaguar Land Rover, by contrast, sold 314,433 vehicles in the 12 months ended March 31. While that represented a 29 percent increase from a year earlier, deliveries of Land Rover SUV’s accounted for more than 80 percent of total output.

“You can’t go on like that,” Rhys said. “You need that volume, you really do. There has to be much more carry-over between Jaguars and Land Rovers under the skin of the cars.”

The relatively narrow model range also leaves Jaguar vulnerable to sudden shifts in consumer taste, especially as buyers begin to switch to smaller, more fuel-efficient models, according Andrew Jackson, an analyst at Datamonitor in London.

“Because they only have three vehicles, they’re somewhat exposed once they get to the end of their life cycle,” he said. “The competition could be providing something that might be a bit cheaper, that looks better or might be better fitted.”

Rhys said he reckons Jaguar Land Rover wants to lift deliveries to as many as 650,000 a year by 2016 and predicts it will announce a new model in the next six months aimed at competing with BMW’s best-selling 3-Series in the small- to mid- sized sedan market.

“They do need something like that,” he said. “Unless you have a vehicle with sales of 150,000 a year, you’re really going to be hard-pressed to justify the Jaguar brand long-term.”

To contact the reporter on this story: Steve Rothwell in London at srothwell@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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