Jaguar Land Rover reported third quarter losses because of a fall in the sale of its cars.
Uncertainty in Europe over new diesel emission standards and Brexit, along with slowdown in sales in China was identified as the reasons for the loss.
The company had made a pre tax profit in the third quarter last year where as it reported a loss of £90m for the quarter this year.
The loss in the quarter has prompted JLR to announce the launch of a “far-reaching” cost-cutting programme to enhance profitability.
With the aim of increasing profitability by £2.5bn, the company plans to reduce total spending by £500m this financial year and next, Jaguar Land Rover said.
JLR chief executive Ralf Speth, said that the new strategy would “lay the foundations for long-term sustainable, profitable growth”.
“Fluctuating demand” in the market has forced the company to close down the company’s Solihull plant, where Range Rover and Jaguar models are manufactured for a two-week period. This cost curtailment strategy was preceded by the imposition of a three-day week policy at JLR’s Castle Bromwich plant.
JLR has a very high symbolic relevance for the British car industry because it makes top-end luxury models that exude an unmistakable British identity and appeal. That characteristic has helped the company to bag huge export markets in Europe, the US and has also made inroads into the largest car market of the world – China.
But in recent times, the company has been plagued by a number of issues and challenges. The recent stricter environmental emission norms across the world have affected a number of models of the company which have diesel engines. Moreover, the company is also viewed to be one that has been slow to react to growing market demands for new hybrid and electric models.
While there has been a slowdown in the North American business for the company, but the major problem for it has been the Chinese market. The increasing trade tensions between China and the US and the consumer uncertainty following import duty changes have hit sales, says JLR. However other luxury brands are reporting better sale and why JLR has not been able to do so is not yet clear.
But according to the announcement by JLR, there will be a tough time for the company and its suppliers because the company plans to save £2.5bn in costs and improved cash flow over the next 18 months even after it has taken cost saving measures such as cutting back production at two plants and laying off agency staff.
On the other hand, the company has seen a slowdown in its Europe business too because of uncertainty surrounding Brexit, the introduction of new emissions-testing rules and a drop in demand for diesel vehicles.
The company reported sale of 129,887 vehicles in the third quarter with aggregate revenue of £5.6bn.
(Adapted from BBC.com)