Take a guess why.
Just when things were beginning to look better for Jaguar Land Rover, Brexit-related issues continue to plague it. This time last year, JLR posted a $113 million loss, which resulted in thousands of job cuts as part of a $3.15 billion cost-savings plan. Production of the ultra-limited Range Rover SV Coupe was also scrapped. For the past two business quarters, however, JLR posted profits, thanks to stabilized sales in China, greater demand in the US, and various other cost-cutting measures.
To help offset a likely disruption of parts from suppliers, a few months ago JLR announced a week-long shutdown that would begin on November 4. Of course, this shutdown was planned when the UK was expected to leave the EU, with or without a deadline, by October 31. But since then, the EU granted the UK an extension to January 31.
As Automotive News Europe points out, it was not possible for JLR to cancel that shutdown and, as a result, there will be a new vehicle shortage for the last quarter of this year.
JLR chief financial officer Adrian Mardell confirmed the production shortage this quarter, which will see a total of 120,000 vehicles built. "That's much less than we expect to retail in the quarter," he said. Inventory will therefore "be very, very thin" now through the end of this year. Mardell also could not rule out a shortage for the first quarter of 2020 as well.
The good news is that JLR expects to remain profitable for the time being, but the continued uncertainty over Brexit could easily come back to haunt it. A no-deal Brexit, according to Mardell, is "the only significant risk we have out there that is live and real and potentially imminent."
The automaker may even be forced to close some of its UK plants after the UK leaves the EU early next year, and that will obviously damage next year's finances as well. There are a total of three JLR plants in the UK, plus an engine plant. Other manufacturing facilities in China and Slovakia were not affected by this month's production stop. There are no JLR production facilities in the US, so everything is imported – including vehicles built in the UK.
If a week-long production stop can cause this much trouble, just imagine what things could be like in a few months' time.