Jaguar Land Rover slashes jobs

British carmaker Jaguar Land Rover (JLR) will slash about 4500 jobs in the UK after being hurt by a slump in China and a critical collapse in its diesel sales.

With diesel power commanding more than 90 percent of JLR’s European volume as recently as 2016 and about 45 percent globally, it has been hurt more than most car makers by the poleaxing of the fuel through a combination of buyer sentiment and government and court actions in Europe.

While its I-Pace battery-electric SUV has kicked goals in northern Europe as it surged late in the year, its combustion-engined problems have lead to it slashing 10 percent of its workforce. About 1500 employees also left the company in 2018.

It has promised production line workers won’t be impacted by the cuts, which will instead focus on contractors, senior management, engineers and designers.

"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 on Thursday.

Unlike the bad old days under Ford’s ownership, JLR has been a solid money spinner for the Tata Group, with its profits exceeding a billion pounds every year from 2011 until last year, while sales climbed from 241,000 cars a year to 614,000 last year.

It has announced that its Wolverhampton engine plant in England will diversify into building electric motors and power units, while it will assemble battery packs at the Hams Hall production centre near Birmingham.

The future of its Castle Bromwich plant, though, is less certain, with more than one industry insider predicting its future beyond five years is most likely to be as a shopping centre.

Owned by Indian firm, the Tata Group, JLR last year announced an 18-month turnaround plan to save £2.5 billion, with a half a billion pounds slashed out of investment plans for each of the 2019 and 2020 years.

JLR struggled financially last year as Brexit uncertainty, the diesel backlash and its slump in China took hold, losing £354 million in the six months to September. Its sales dropped 4.6 percent to less than 600,000 vehicles.

Fingers have also been pointed at the £40 million JLR has spent on its mid-pack Formula E electric open-wheeler racing operation.

“China has driven the sharp deterioration in profits. It’s the single biggest challenge,” JLR finance chief, Ken Gregor, told analysts in November.

He admitted that its Changshu plant in China was mostly mothballed in October “in order to allow the inventory of both our vehicles and dealer inventory to start to reduce."

It has also warned that a poor trade deal or a no-deal Brexit could cripple it, with the highest proportion of British-made inventory of any carmaker outside small operations like Aston Martin. It has opened a plant in Slovakia to give it a cheaper production base and a hedge against Brexit, though it only has capacity for 150,000 cars a year.