Jaguar stalls to £90m in red
JAGUAR Land Rover sparked fears of job losses yesterday as it unveiled a radical turnaround plan after plunging into the red on the back of sliding sales.
Britain’s biggest car maker, owned by Indian conglomerate Tata, said all options were on the table to achieve £2.5billion profit, cost and cashflow improvements over the next 18 months.
It is reducing planned annual spending by about £500million to £4billion this financial year and next, but faces cuts among its 44,000 global workforce, 40,000 of whom are based in the UK.
JLR’s action plan was announced as it posted a second-quarter pre-tax loss of £90million, compared with a £385million profit for the same period last year.
Sales slumped by 13.2 per cent to 129,887 and revenue was down 10.9 per cent to £5.6billion.
JLR said the bulk of the sales decline was down to “challenging” market conditions in China following import duty changes and escalating trade tensions with America.
A further dent came from the introduction of European emissions standards known as WLTP, along with diesel tax and regulations and ongoing Brexit uncertainty which had hit UK demand. Chief executive Dr Ralf Speth said: “In the latest quarterly period, we continued to see more challenging market conditions. Given these challenges, JLR has launched far-reaching programmes to deliver cost and cashflow improvements. Together with our ongoing product offensive and calibrated investment plans, these efforts will lay the foundations for long-term sustainable, profitable growth.”
As well as a detailed review of investment spending, JLR has frozen recruitment and non-essential travel. It has moved to a three-day working week at the Castle Bromwich factory until December.
David Bailey, of Aston Business School, said JLR was caught in a “perfect storm” with the shift away from diesel and issues in China. He said: “I can’t see how they’d make £2.5billion of savings without laying off workers.” Christian Stadler, of Warwick Business School, added: “This is more bad news for Jaguar Land Rover.
“The most pressing concern is the drop in sales in China. Brexit could hit sales even harder, as the car manufacturing industry in the UK is so closely integrated with that on the continent.”