Effectively, this is Jaguar Land Rover trying to draw a line under past mistakes by taking one big hit, preparing the firm to move forward under its ‘Charge’ and ‘Accelerate’ turnaround and transformation plans. Through those plans, Jaguar Land Rover is targeting more than £2.5bn worth of savings, which we already know includes the loss of 4500 jobs, this year.
Jaguar Land Rover is also investing in the future; in the final three months of 2018, it invested £1bn, including funding for an engine manufacturing centre to build electric motors, and a battery assembly centre. Both will be located in the UK and help the firm’s plans to offer an electrified version of every model in its line-up from 2020 on.
So it is possible to spot some positives, but the challenge the company faces in staging a turnaround is highlighted by that £273m pre-tax loss in the last quarter. For Jaguar Land Rover to stage a recovery, first it has to halt the decline.
Jaguar Land Rover says the primary reason for that £273m loss was “challenging market conditions” in China, where car sales have dropped sharply in the past year. The firm’s October-December sales in China of 22,100 cars was down 47.1% year on year (compared with a market decline of 15%), enough to offset strong – and above industry average – sales growth in the UK (up 18.4%) and North America (up 21.1%).
Again, it is possible to spot some positives here. Along with the E-Pace, Jaguar’s I-Pace electric SUV was one of the firm’s few models to increase its sales in the last quarter (Jaguar’s saloons notably struggled). It is, however, notable that both those models are built under contract in Austria, so Jaguar’s margins on them will be lower.
The success of the I-Pace is well-deserved, given Jaguar beat the likes of Mercedes, BMW and Audi to the market with a premium SUV. But that raises questions: we know those firms are gearing up to launch vast ranges of EVs in the coming years. Publicly, at least, there are few signs of Jaguar Land Rover following up the I-Pace. While electric cars still represent a small fraction of the car market, it is a clear growth area that Jaguar Land Rover could capitalise on, particularly in China.
That £3.4bn hit is the latest in a string of painful actions (especially for those losing their job) Jaguar Land Rover has taken to pay for past mistakes. The next step is to find the right way forward. The new Range Rover Evoque should help, and the forthcoming Land Rover Defender will be key. Bolder actions may be required: Autocar has already revealed the firm is considering turning Jaguar into an electric-only brand. As of yet, that plan has not been signed off.
Still, Jaguar Land Rover’s recent actions have shown that company bosses are prepared to make difficult decisions in order to move forward. Which, even if it can’t sugarcoat a £3.4bn loss, is at least a potentially positive sign for the firm’s future.
Jaguar Land Rover posts £3.4 billion loss in final three months of 2018
Opinion: Why JLR's job loss announcement could mark the first day of Jaguar's salvation (from January 2019)
Jaguar Land Rover confirms 4500 job losses as part of transformation plan
Jaguar Land Rover to electrify entire range from 2020