Can Jaguar turn it around?
Jaguar Land Rover, one of the world’s premier car makers, has been experiencing some troubles of late. Issues such as the falling popularity of diesel cars, a fall in Chinese demand and general uncertainty thanks to the ongoing Brexit issue all contributed to a loss of £90m in Q3 2018. More worryingly, this marked the first six months of consecutive losses since 2008 when Tata Motors took the company over.
As generally happens, the consequences have so far fallen on the shoulders of the workforce which has endured severe job losses and a reduction in working hours. 1,000 jobs were lost at the flagship Solihull plant, which produces Range Rovers, earlier this year in addition to a two week total shutdown of operations to allow sales to catch up with production. The Castle Bromwich plant, which produces Jaguars, has been moved to a three-day working week thanks to similarly poor sales.
Chinese sales have slumped by half thanks to the market slowing; sales in the USA, Jaguar Land Rover’s largest market, fell by almost 5%; sales in Europe fell by just under 12% because of a new vehicle testing regime; sales in the UK fell by 0.6%.
Altogether it is not a pretty picture and it has inspired the launch of a £2.5bn turnaround programme which aims to save the company. The main planks of this plan are £1bn in “savings” which likely means further job losses, a further £1bn reduction in investment plans, and £500m taken out of inventory and working capital.
Further details have not been forthcoming so far but it seems that the board of Jaguar Land Rover is taking the threat of changing markets seriously. The issue of what happens to UK marketing in the event of a destructive Brexit is unclear, but it is possible that Jaguar Land Rover is acting as the canary in the coalmine in this case.
If a relatively minor change can cause the UK’s biggest automaker to put a £2.5bn turnaround plan into action then what drastic measures might be required to save other less proactive companies in the future? Similarly, if a company as established and well-known around the world is beginning to suffer already, what does the future hold for other less renowned companies which perform equally vital roles in the economy?
It is to be hoped that this big plan turns Jaguar Land Rover’s fortunes around and it is likely that other companies will be watching closely and learning what they can.