Jaguar Land Rover Poised To Cut 5,000 Jobs

Jaguar Land Rover makes large, heavy cars, the kind that suck down lots of fuel. Even though their customers are quite capable of paying premium prices for their vehicles, they still want at least a modicum of fuel efficiency. How do you make a large, heavy car fuel efficient? Stuff a diesel engine in it.

The problem with that approach is diesels have a tough time meeting the EU’s newest vehicle emissions standards. Lots of cities have either banned diesels or are talking about doing so. The Volkswagen diesel cheating scandal also got people thinking about whether owning a diesel-powered vehicle is a smart move. On the Continent, sales of diesels have plummeted, and that has put a big dent in the corporate fortunes of JLR.

It’s true the new Jaguar I-Pace is a marvelous package. Graceful and fast with sure footed off road manners, it is selling very well at home and in Europe. But sales of Jaguar’s other models are down across the board and Land Rover sales are even worse. To add insult to injury, sales in China are down dramatically. The Chinese –spurred on by their government — want electric cars and JLR has none to offer them.

JLR, which is owned by Tata Motors of India, suffered a £90 million loss through the first three quarters of 2019. It has now embarked on a reorganization of its core business —  a move that may see some 5,000 of its 40,000 person workforce laid off next year according to a report by The Guardian, citing the Financial Times.

The company has hired the Boston Consulting Group to put together a turnaround plan designed to save £2.5 billion over the next two years. It includes cutting costs by £1 billion coupled with strategies to improve profits. Part of the cost savings will come from slashing all non-essential travel. [I’m lucky the travel budget wasn’t slashed prior to my boondoggle press tour to Portugal to drive the I-PACE last summer.]

The company is straining to transition to a new line of plug-in hybrid and fully electric vehicles, a process that can eat up cubic feet of cash in a heartbeat. The I-PACE, as much as it is a joy to drive, has raised some concerns about range and efficiency. Clearly, JLR has some work to do before it becomes a leader in the electric car revolution. Nonetheless, the vehicle is selling quite well in Europe so far.