The UK government has ruled out financial support for Jaguar Land Rover as the carmaker prepares to cut jobs amid rising costs, weaker sales, US tariffs and growing competition from Chinese automakers.
JLR is expected to cut around 4,000 positions, equivalent to roughly 10% of its global workforce, over the next two years, according to a Times report. The UK’s largest carmaker is looking to reduce costs and restructure its operations as changing market conditions put pressure on its business.
Asked by the BBC whether the government could provide financial support to JLR, UK Business Secretary Jonathan Reynolds said on Sunday: “I don’t intervene and run businesses. They need to know what the right footprint for them going forward is.”
JLR said it has started a voluntary redundancy programme as part of a broader plan to deliver about £1.7 billion ($2.3 billion) in savings over two years. The company is also targeting a lower break-even point of 300,000 vehicles and plans to simplify its business in response to global market conditions.
The company did not disclose the number of jobs that could be affected by the redundancy programme.
Reynolds said he had spoken with JLR’s chief executive and Unite general secretary and would meet them early this week, as per the report. He also made clear that the government would not step in to prevent the restructuring.
“A company the size of JLR, which is a huge British success story, at various times in its business cycle the number of, directly, people it employs will change,” Reynolds said. “If this is about making sure over time that the workforce is right to make the business as competitive as possible, that’s the conversation we need to have. Of course you want to mitigate any job losses.”
The restructuring comes as European carmakers face increased competition from Chinese manufacturers, including BYD and Chery, which have expanded their presence with lower-priced electric and hybrid vehicles.
Several established European automakers are also cutting costs. Volkswagen last week secured supervisory board backing for a plan involving a further 50,000 job reductions.
For JLR, the changes come alongside plans to expand its presence in the US, its largest market. The company's restructuring could alter the role of the UK within its wider manufacturing operations as it seeks to improve competitiveness across markets.
JLR employees were reportedly warned to expect the redundancy announcement on Monday.
The potential job cuts also come as the UK government seeks to revive domestic manufacturing. Prime Minister Andy Burnham entered Downing Street this summer promising to re-industrialise the country and expand employment opportunities.
The UK was the world's second-largest auto manufacturing base in the 1950s but has since fallen outside the global top 10, behind countries including Canada and Slovakia. Brexit and the collapse of British EV battery startup Britishvolt have added to the challenges facing the country's automotive industry.
JLR employs around 33,000 people in the UK and about 40,000 globally. The company is owned by India's Tata Motors Passenger Vehicles Ltd.
The carmaker's revenue fell nearly 10% in its most recent quarter, while pretax profit declined 69% to £109 million.
JLR has also dealt with significant operational disruptions in recent years. Flooding at a key supplier affected its operations, followed by a cyberattack that halted production at facilities around the world. The disruption subsequently affected its supply chain, prompting the UK government to guarantee a £1.5 billion emergency loan to help JLR pay suppliers.
The company has also been working to strengthen its US operations. In May, JLR reached an agreement with Stellantis to jointly develop vehicles in the US, a deal that could eventually provide access to manufacturing facilities there.
At the same time, JLR is pushing further into the premium electric vehicle market. Its first electric Range Rover went on sale earlier this month at £154,070, making it one of the most expensive electric SUVs in the market and nearly £50,000 more expensive than its combustion-engine equivalent.
The pricing highlights the challenge facing premium European manufacturers as lower-priced electric and hybrid SUVs from Chinese automakers gain ground in the UK market.
