Gas Engine Shortage At Land Rover - 25% of Production

FRANKFURT May 23, 2005; Reuters reported that a shortage of gasoline engines supplied by the collapsed Powertrain company has forced Ford Motor Co.'s Land Rover to cut output of the Freelander model and halt its shipments to North America, it said on Monday.

"From the beginning of July, we will go from a double shift to a single shift on Freelander," a spokesman for the British carmaker said, adding it would cut 300 contract jobs at the Solihull plant where it makes the sport utility vehicle.

The shortage affects only gasoline engines, which account for roughly a quarter of Freelander sales, the spokesman said. The remainder are powered by diesel fuel.

Owned by Phoenix Venture Holdings Ltd, Powertrain has been run by administrators since April, when sister company MG Rover also went into administration. Powertrain made engines and transmissions for Rover, MG, Land Rover and other companies.

Faced with a dwindling stockpile of motors and scant prospects that Powertrain will resume production, Land Rover is also rationing its reduced output of Freelanders -- the brand's smallest model in its range.

"The decision was taken to divert cars that would have gone to Canada and the U.S.A. to those petrol-only markets where the presence of Freelander is essential to the presence of Land Rover," he said.

These include Brazil, China, Greece, Japan, Norway, Russia, Singapore and Taiwan.

The Freelander represents around 6 percent of Land Rover product sales in the United States. The company has sold around 940 of the SUVs in the U.S. market and just over 100 in Canada so far this year.

It sold around 6,000 Freelanders in North America last year.

A new generation of Freelander is due late next year. The car will get motors supplied from the Ford group and be built at the Halewood plant.

Land Rover last month played down the potential for disruptions from the supplier's collapse, but the spokesman said it had hoped at the time Powertrain would resume output.