LONDON -- Jaguar Land Rover is expected to announce substantial job cuts as the British automaker looks to reverse losses following double-digit drops in demand in China and a slump in sales of its diesel cars in Europe.
"The announcement on job losses will be substantial, affecting managerial, research, sales, design," said a source, who spoke on condition of anonymity. Production-line staff will not be affected "at this stage," said the source.
The cuts will be "substantial" and run into the thousands, the source told Reuters. The number could reach 5,000, the BBC reported.
JLR lost 354 million pounds ($452 million) between April and September as diesel demand plummeted in Europe and sales in China tumbled.
The automaker has already cut about 1,000 jobs in Britain, shut its Solihull plant for two weeks and announced a three-day week at its Castle Bromwich site.
The company, owned by India’s Tata Group, has announced a turnaround plan that calls for savings of 2.5 billion pounds in 18 months. Of that total, 1 billion pounds will come from cutting 500 million pounds each from its investment plans for the 2019 and 2020 financial years, the company has said.
The cuts could result in JLR shuttering one of its plants in the UK, with the Castle Bromwich site in Birmingham, central England, most at threat. “It will be a shopping center within five years,” predicted Max Warburton, an analyst at Bernstein.
JLR became Britain's biggest automaker in 2016 and employs nearly 40,000 people in Britain.
JLR has been a big earner for Tata Motors since it bought the automaker from Ford in 2008. The company has posted profits in excess of one billion pounds for each financial year since 2011 as sales rose from 241,000 in the same year to 614,000 in the 2018 financial year.
JLR had been on course to build around 1 million vehicles by the turn of the decade, but output in 2018 looks set to have fallen as sales in the first eleven months dropped 4.4 percent.
Sales in China were down 50 percent in November, and 19 percent for the first 11 months of 2018, JLR figures showed.
“China has driven the sharp deterioration in profits. It’s the single biggest challenge,” JLR's finance chief, Ken Gregor, told analysts on a financial results call in November. Gregor said that the firm's Changshu plant in China "has basically been closed for most of October in order to allow the inventory of both our vehicles and dealer inventory to start to reduce."
Diesel accounts for 90 percent of the automaker’s British sales and 45 percent of global demand, the company said last year. Diesel demand has plunged following new levies in the wake of the Volkswagen Group emissions-cheating scandal.
JLR has warned of further losses in the event of the UK leaving the EU with a poor trade deal or no deal. Like fellow automakers, the company could see its three UK car factories grind to a halt in fewer than 80 days if lawmakers next week reject a Brexit deal with the EU, leading to tariffs and customs checks between the UK and Europe.
The automaker has opened a new plant in Slovakia with a capacity of 150,000. The plant is building the Land Rover Discovery SUV and will add the Land Rover Defender SUV, analysts predict.
Reuters contributed to this report
