Companies

JLR to cut 4,500 jobs globally amid declining sales in China, Brexit concerns

Vidya Ram London | Updated on January 10, 2019 Published on January 10, 2019

Global vehicle sales fell by 4.6% to 5,92,708 units in 2018; Ford too joins the bandwagon

Jaguar Land Rover is to cut around 4,500 jobs globally as part of a £2.5-billion overhaul programme designed to help the company contend with a 4.6-per cent drop in sales last year, amid a toughening environment globally as it has been buffeted by a fall in sales in China — once its biggest and most profitable market, a drop in appetite for diesel vehicles and Brexit-related uncertainty in the UK.

Highlighting the pressures on the UK and European auto industry, Ford has also announced an overhaul of its European operations — including in the UK — which is expected to result in thousands of job losses, though it is yet to confirm numbers as discussions with unions are still on.

Sales dip

JLR sold 592,708 cars last year — a 4.6-per cent fall year-on-year — as the boost from the introduction of the Jaguar E-PACE and I-PACE was offset by weakness in China, where sales fell nearly 22 per cent during the year, as the economic slowdown and ongoing trade tensions hit consumer confidence.

Sales globally fell particularly sharply in December, down 6.4 per cent y-o-y.

Cost-cutting drive

“We are taking decisive action to help deliver long-term growth, in the face of multiple geopolitical and regulatory disruptions as well as technological challenges facing the automotive industry,” said CEO Ralf Speth.

JLR had earlier announced plans to cut costs by £1 billion, over an 18-month period, in response to deteriorating conditions, which led to its £90-million quarterly loss in September.

The past year has been a challenging one for JLR: in April, it announced cuts of up to 1,000 temporary roles at its Solihull plant and temporary cuts to production schedules elsewhere. It reduced its workforce by 1,500 over the course of that year.

The company said the latest workforce changes will begin with a voluntary redundancy programme in the UK.

Diesel vehicles

Alongside China, JLR has also been hit by the slump in demand for diesel vehicles (which constitute the majority of vehicles it produces) across Europe, in particular in the wake of the Volkswagen scandal and plans by European leaders to more tightly regulate diesel vehicles, which were once championed as the less-polluting solution by many of them.

Along with the rest of the industry, JLR has struggled to keep pace with the rapid descent in consumer appetite for diesel vehicles, though has announced that by 2020 all of its new vehicles will be electrified.

Brexit woes

While the company’s latest announcement made no mention of Brexit, it has previously warned that a bad Brexit deal could cost it as much as £1.2 billion in profit each year, putting £80 billion of further investment and jobs at risk.

The JLR developments came as Ford said it had started consultations with union partners and others as it began plans for a revamp of its European business that would also include exiting less profitable vehicle lines and tackling under-performing markets.

Published on January 10, 2019
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