Fears for UK in­vest­ment in our big­gest car­maker

Birmingham Post - - NEWS -

Quite why sales haven’t bounced back for JLR isn’t at all clear. Audi, mean­while, has been chalk­ing up records in China, with sales up 13 per cent in Septem­ber.

Is it JLR’s prod­uct mix? Is it the deal­er­ship net­work? It’s not at all clear.

JLR it­self said that it still ex­pected lower tar­iffs on China’s im­ports of UK-made goods to be ben­e­fi­cial over the full year.

The slump in Chi­nese sales, plus a seven per cent drop in sales in North Amer­ica (which had shown signs of soft­en­ing ear­lier in the year), dragged over­all JLR sales for Septem­ber down by 12 per cent to 57,114 cars.

My own back-of-an-en­ve­lope cal­cu­la­tions sug­gest that the two-week shut down could see 14-15,000 fewer ve­hi­cles be­ing made, in­di­cat­ing that JLR must have built up con­sid­er­able stock lev­els as de­mand slack­ened.

These are mod­els with big pre­mi­ums so ex­pect a hit of over £600 mil­lion on the firm’s rev­enues for the year and as much as more than £100 mil­lion on the bot­tom line.

JLR sales had held up rea­son­ably well in the UK in Septem­ber (down just one per cent) and Europe (down five per cent) de­spite big over­all falls in both mar­kets (down 21 per cent in the UK and 31 per cent in Ger­many for ex­am­ple), in large part linked to the in­tro­duc­tion of a new real-world test­ing regime, re­duced de­mand for diesels and, in the UK’s case, Brexit un­cer­tainty. JLR’s chief ex­ec­u­tive Ralf Speth had pre­vi­ously stressed un­cer­tainty over Brexit and con­fu­sion over govern­ment pol­icy on diesel en­gines as big fac­tors in job losses at Soli­hull and the move to a three-day week at Cas­tle Bromwich.

Most re­cently, he warned that tens of thou­sands of jobs would be at risk in the event of a no deal on Brexit, with the lat­ter po­ten­tially cost­ing the firm £1.2 bil­lion.

The firm also said it would have to re­con­sider £80 bil­lion of UK in­vest­ment over five years in the event of a messy, no-deal Brexit as ac­cess to the sin­gle mar­ket would be hin­dered and the flow of car part im­ports dis­rupted.

In the wake of the Soli­hull news, Unite the Union slammed a “triple whammy” of govern­ment in­com­pe­tence over Brexit, diesels and half-hearted sup­port for elec­tric ve­hi­cles.

On the lat­ter, ru­mours are cir­cu­lat­ing that Chan­cel­lor Philip Ham­mond might scrap or scale back sub­si­dies of pur­chases of elec­tric cars ow­ing to aus­ter­ity.

That’s de­spite the ur­gency of the need to re­duce car­bon emis­sions and Prime Min­is­ter May’s claim last week in Birm­ing­ham at the Tory Con­fer­ence that aus­ter­ity was over. Scrap­ping sub­si­dies, plus the end of UK elec­tric car sales count­ing to­wards Eu­ro­pean emis­sions tar­gets, could ef­fec­tively kill off a fledg­ing elec­tric car mar­ket in the UK even be­fore it gets prop­erly charged up.

Mean­while, JLR is yet to say where it will as­sem­ble a new range of elec­tric cars.

A big worry here is that the in­dus­try is about to trans­form it­self away from in­ter­nal com­bus­tion en­gine tech­nol­ogy to au­ton­o­mous, con­nected elec­tric cars over the next decade and this in­vest­ment could be lost from the UK in the event of a hard Brexit.

The firm re­cently said it would move Dis­cov­ery pro­duc­tion to Slo­vakia.

I had ex­pected to hear what new mod­els would come to Soli­hull in its wake but no news has been forth­com­ing.

Nor have we heard what new mod­els will go into Cas­tle Bromwich or whether a mooted bat­tery pro­duc­tion fa­cil­ity will go ahead in the re­gion.

The fear is that UK in­vest­ment is stalling at the firm.

But, as Mr Speth noted a few weeks ago, “at the end of the day we’re in a cy­cle plan that means I have to make a de­ci­sion. I can’t just wait, wait, wait, wait”.

Not­with­stand­ing the un­cer­tainty in China, the UK govern­ment needs to pull its fin­ger out to end un­cer­tainty here – notably on Brexit and the pol­icy on diesels – and in bet­ter sup­port­ing the take up of elec­tric cars.

Oth­er­wise, the UK risks los­ing a wave of in­vest­ment and, with it, a raft of new tech­nolo­gies. Pro­fes­sor David Bai­ley works at

the As­ton Busi­ness School

Ex­pect a hit of over £600 mil­lion on the firm’s rev­enues for the year

> JLR chief Dr Ralf Speth

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