Jaguar Land Rover Now Targeting $3.3 Billion in Cuts
Jaguar Land Rover has increased its savings target for the year to $3.3 billion (£2.5 billion) following a $540 million (£413 million) pre-tax loss for the quarter ending in June. Losses are hardly uncommon within an industry shaken by the pandemic, but JLR went into this year already confronting an uphill battle.
In 2019, the company was deep in the midst of a restructuring plan aiming at $2.5 billion in life-sustaining savings. Unfortunately, the move required the elimination of thousands of positions as it tried to imagine the effects of Brexit and contend with falling sales in its largest markets. That includes China, which the firm assumed would offer continued growth in the months leading up to coronavirus’ big debut and increasing political tensions between the Communist Party of China and United Kingdom.
Having selected former Renault boss Thierry Bollore as its next CEO, the brand’s current leadership is basically hoping China rebounds.
Current JLR boss Ralf Speth even said that he was confident the market was in recovery. While European sales continued looking unhealthy, Chinese volumes actually pitched up to 23,726 units in the second quarter, less than 1,000 deliveries shy of the same period in 2019. However, the overall situation seems to have worsened through the summer.
In July, Chinese state-run media reported that British firms like Jaguar Land Rover could face severe consequences following the UK’s ban on Huawei’s entry into the nation’s 5G telecom network over national security concerns. “If the UK upholds such a hostile attitude towards China, Beijing may have no other choice but to strike at British companies like HSBC and JLR,” a China Global Times article stated in July.
Meanwhile, stringent emissions regulations coming out of the European Union (and China) have hurt a brand that relies heavily on SUVs to remain profitable. You’d think parent company Tata Motors would be furious, but it doesn’t have much room to be critical about profitability after announcing a consolidated net loss of $1.13 billion (84.39 billion rupees) for the quarter ending June 30th — that’s against a loss of 36.98 billion rupees just a year prior.
“The COVID-19 pandemic has deeply impacted the auto industry in Q1FY21. We see some disruption due to the intermittent shutdowns and supply chain bottlenecks,” CEO Guenter Butschek said in the release.
Moody’s Investors Service downgraded Tata’s credit rating last month and has a negative outlook on both firms. Still, the automakers remain optimistic about the future, claiming they’re in a strong position and have spread out their debt to a point where repayment won’t be an issue. Of course, if something does come up, Tata Motors has said it is already in discussions with the UK government about financial assistance for JLR.
[Image: JLR]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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The Chinese Communist Party giveth, The Chinese Communist Party taketh away.
I notice the vehicle in the picture casts no shadow. Must be some super-secret new tech they are working on.