Jaguar Land Rover, owned by India's Tata Motors Ltd., will cut about 4,500 jobs worldwide as part of a cost-cutting transformation program, it said Jan. 10, as it plots out its future after an abrupt slowdown in demand from the key Chinese market and as consumer demand shifts away from diesel engine vehicles.
The announcement compounded a sense of gloom in the automotive sector after Ford announced in a similar vein that it was planning an unspecified number of job cuts running into the thousands across Europe as it seeks to boost competitiveness and profits.
Jaguar Land Rover, which unites two prestigious British automotive brands known globally for their luxury and sporting prestige and off-road capabilities, had enjoyed a sustained streak of healthy profits. But a downturn in demand in China in 2018 that spanned its entire car market was a key factor in pushing the automaker into the red in its last two quarters.
"We are taking decisive action to help deliver long-term growth, in the face of multiple geopolitical and regulatory disruptions as well as technology challenges facing the automotive industry," CEO Ralf Speth said.
The company said it would deliver £2.5 billion of cost reductions and cash flow improvements over 18 months as part of its "Charge and Accelerate" initiative and pursue other longer term cost efficiencies in a strategy similar to those announced by Volkswagen AG, Peugeot SA and Ford Motor Co. who are pursuing cost reductions to garner cash for investments in areas like electrification.
Jaguar launched its battery-electric I-Pace in 2018, an aggressively styled hatchback priced to compete with Tesla's Model S sedan.
The company's profit streak was halted in the second quarter of 2018 when it posted a pretax loss of £264 million versus a £571 million profit in the same period of the prior year. In the quarter ending September 30, 2018, its pretax loss stood at £90 million. S&P Ratings downgraded Jaguar Land Rover in December to BB- from BB.
Jaguar Land Rover had increased its global workforce to 43,515 by the end of September, versus 41,906 a year earlier, according to its most recent financial report.