New Land Rover production begins

The first Land Rover model designed and built by car giant Ford is set to roll off the production line in the UK.

The Freelander 2 is being made at Jaguar's Halewood Factory on Merseyside and the success of the model is seen as vital to the economy of the region.

Ford, which bought the brand in 2000, is relying on the car to boost sales.

Ford's UK brands are under threat after its US parent - which reported a £3bn third-quarter loss - warned it could not support underperforming brands.

Widening losses

The US carmaker has recently insisted that apart from Aston Martin, its UK brands - such as Jaguar and Land Rover which are held by its Premier Automotive Group (PAG) - are not for sale, despite predicting the group would not see profits in 2006.

However, the declaration came ahead of its latest results which showed that losses at the US group had widened once again.

Really there's a question mark over whether Ford has enough cash themselves to actually hang onto Land Rover and Jaguar
Professor David Bailey, Birmingham Business School

News that losses were almost 30 times higher than at the same time last year prompted new chief executive, former Boeing executive Alan Mulally, to declare the results "clearly unacceptable".

Ford's woes prompted Mr Mulally to warn that the group would no longer support its UK brands unless they showed signs of improvement.

Since the news, speculation has been widespread that the US group could sell off its Warwickshire-based luxury brand Aston Martin.

Ford - like its US rival General Motors - has suffered from lower sales, as higher petrol prices have led consumers to opt for more fuel-efficient Japanese cars.

Uncertain future

Professor David Bailey of Birmingham Business School also warned that the future of the UK division of Ford was "hanging in the balance".

"Unless they improve dramatically they (Ford) can't guarantee that they can hang onto the UK brands," he told the BBC.

"Behind all of this is Ford's enormous restructuring problems - sales are down enormously in the North American market, they are looking to cut costs massively over they next two years".

"Really there's a question mark over whether Ford has enough cash themselves to actually hang onto Land Rover and Jaguar," he added.

However, Professor Bailey added that Land Rovers tend to fare well in the European market and the new model could take sales away from BMW.

The decision to manufacture the Freelander at Halewood marks a massive turnaround for the plant which once lost 300 days of production a year through strikes.

Eddie O'Hara Labour MP for Knowlsley South - which includes Halewood - told the BBC the area was confident that the new Freelander was a "winner" and would be in production at Halewood for at least nine years.