Jaguar Land Rover will announce plans to cut thousands of jobs early in the new year, as part of a £2.5 billion (€2.7 billion) turnaround plan to revive the fortunes of Britain's largest carmaker.
JLR, which employs 40,000 people in the UK, has been stung by sliding demand for diesel, poor sales in China and costs of preparing for Britain’s departure from the EU.
In October, after posting a loss of £90 million for the three months to September, it outlined plans to find savings of £2.5 billion, including £1 billion of cost reductions within 18 months, without specifying how many jobs would be lost.
During January the company will outline the short-term part of its plan, which will include job losses that run into the thousands, according to several people close to the company.
The group has already shed 1,000 roles at its flagship plant in Solihull, and reduced working hours at other sites amid falling demand for its diesel vehicles and saloon cars.
Analysts are pencilling in up to 5,000 roles that may be lost, as the business is forced to take an axe to its workforce in order to survive.
"It's do or die at the moment," said Robin Zhu, an analyst at Bernstein in Hong Kong who covers JLR and its parent company, Tata Motors. "JLR has been seriously mismanaged in recent years, with cost runaways, products disappointing in the market, and hedging issues costing it billions.
“Meanwhile there’s arguably been a lack of accountability in the management ranks.”
Tata Motors has drafted in Boston Consulting Group to draw up turnaround plans, according to three people.
There are two strands to the plan – the shorter-term Project Charge, and the medium-term Project Accelerate. Charge is a three-year plan that will focus on generating costs savings within 18 months.
Losses
JLR said that it had in September announced plans “to improve its business performance through the ongoing Charge and Accelerate transformation programmes, targeting £2.5 billion of cost, cash and profit improvements over the next two years. As a matter of policy, we do not comment on speculation and rumours about potential measures that might form part of these plans.”
The group, which has recorded its first six-months of losses in a decade, aims to reduce costs by £1 billion, investment by £1 billion and other savings by £500 million. It has already implemented an immediate hiring and non-essential travel freeze, and begun reviewing its use of agency staff.
The longer term plan is expected to reduce JLR’s often-competing range of models.
The company’s Jaguar brand sells several sports utility vehicles that compete directly with its Land Rover models, while two of its mid-range Range Rover vehicles – the Velar and the Range Rover Sport – have significant overlap.
The move comes after a tumultuous year for the British group, which enjoyed years of strong growth after Tata Motors bought the company from Ford in 2008.
Sales in the three months to September fell by 13 per cent, with every major region – UK, US, China and Europe – witnessing a slowdown.
Of JLR’s 13 models, only three – the Range Rover Velar, the new Jaguar E-Pace and the electric Jaguar I-Pace – saw sales rise. The Land Rover Discovery Sport, its biggest selling model, saw demand fall by more than 11 per cent.
– Copyright The Financial Times Limited 2018
