Brexit uncertainty. Tariffs. Dropped diesel demand. The problems add up.
In case you didn’t already know, Jaguar Land Rover’s parent company is Tata Motors, founded and based in India. There’s a certain colonial historical irony to that. Anyway, JLR hasn’t had it easy lately due to circumstances beyond its control.
According to Reuters, Tata has announced a turnaround plan for JLR following tough breaks like trade tensions between the US and China, decreased demand in Europe for diesels, and concerns over Brexit. JLR’s vehicles are just fine; it’s the current circumstances that are cause for concern.
Tata’s plan is called “Project Charge” and it will involve cost-cutting and improved cash flows by 2.5 billion pounds ($3.25 billion) over 18 months.
To help counter the fallout over diesel, the Jaguar I-Pace, the firm’s first all-electric vehicle, is just going on sale. The reborn Land Rover Defender, expected to be a huge seller, will arrive in 2020. Also by that same year, JLR will offer a hybrid or electric version of all of its vehicles.
“Together with our ongoing product offensive and calibrated investment plans, these efforts will lay the foundations for long-term sustainable growth,” JLR CEO Ralf Speth said.
The UK automaker has also reduced its pre-tax profit expectations for the current fiscal year, which ends on March 31, 2019. If all goes as it should, JLR will break even. Additional parts of Tata’s turnaround plan will see cutbacks on non-product investments and speed up asset sales.
Improvements in general efficiencies, such as purchasing and material cost, will also get underway. For example, Jaguar already cut back on the number of production days at two of its UK production plants. Already in the first six weeks since the plan was initiated JLR has saved around $387 million. One of the reasons why JLR began to lose money in the first place was a drop in demand for sedans and SUVs in China as a result of tariff changes. Although the Chinese government has since reduced import tariffs, demand for those vehicles in the world’s largest auto market failed to improve.
In order to prevent any more damage, Tata is clearly not taking any chances. Once new product more in tune with the times (meaning less diesel) arrives in full force, JLR should find itself in better shape. Oh wait, what about the uncertainty of that whole Brexit thing? Well, we’ll find out in less than five months.