Jaguar Land Rover makes loss as sales slide 13%

JLR plant in SolihullImage copyright Getty Images

Sales of Jaguar Land Rover cars have fallen sharply, taking the firm into a loss for the three months to the end of September.

The firm blamed lower sales in China for the decline, as well as uncertainty in Europe over diesel and Brexit.

Jaguar Land Rover made a pre-tax loss of £90m for the quarter, compared to a profit for the same period a year ago.

JLR said as a result, it was launching a “far-reaching” cost-cutting programme to improve profitability.

Jaguar Land Rover said the £2.5bn turnaround programme would include reducing investment and taking out inventory and working capital.

The new strategy would “lay the foundations for long-term sustainable, profitable growth”, said chief executive Ralf Speth.

The firm’s Solihull plant, where it makes Range Rover and Jaguar models, is currently closed for a two-week shutdown in response to “fluctuating demand”. That follows a move to a three-day week at JLR’s Castle Bromwich plant.

Analysis: Jonty Bloom, BBC business correspondent

JLR is the jewel in the crown of the UK car industry, making top-end luxury models with an unmistakable British appeal. That has seen it win huge export markets in Europe, the US and increasingly in China.

But it has been hit by a series of problems; many of its models have diesel engines and have therefore been affected by recent environmental worries and it is seen as having been too slow to adapt to demands for new hybrid and electric versions.

The North American market is slowing down, but it is in China that it has had its biggest problems. JLR says sales there have been hit by consumer uncertainty following import duty changes and escalating trade tensions with the US, but other luxury car brands are increasing sales there, so it is not clear why JLR is suffering so badly.

The company has already responded by cutting back production at two plants and laying off agency staff, but now it has announced it is aiming to save £2.5bn in costs and improved cash flow over the next 18 months. Which is likely to mean a tough time for JLR and its suppliers.

Jaguar said the fall in sales reflected “challenging” market conditions in China, where demand was affected by consumer uncertainty over changes to import duties and escalating trade tensions between the US and China.

The firm said sales in Europe had been depressed by weaker demand for diesel vehicles, the introduction of new emissions-testing rules and uncertainty related to Brexit. Chief executive Mr Speth has also been outspoken on the risks to the car industry posed by Brexit.

JLR was bought by India’s Tata Motors a decade ago. It now employs around 40,000 people in the UK. It also has manufacturing facilities in China, Brazil, India and Austria, and a major new production site in Slovakia.

Job losses

David Bailey, motor industry specialist at Aston Business School, said after years of strong performance, including weathering the financial crisis, JLR was now facing a “perfect storm” which would inevitably lead to more job losses.

“We’ve seen 1,000 job cuts already. I think we’d expect to see more in the New Year. I can’t see how they’d make £2.5bn of savings without laying off workers,” he said.

He said while management could be criticised for not moving away from diesel and into hybrids quickly enough, the main factors affecting sales were outside their control.

JLR’s revenues were £5.6bn on sales of 129,887 vehicles in the three months to October.

As a result JLR’s parent company, Tata Motors, reported a net loss £110m for the quarter. Tata Motors is part of the Tata conglomerate, which operates in sectors from tea to steel.