Chief executive to step down in September as company reveals 2.8% year-on-year revenue rise
Jaguar Land Rover’s CEO, Ralf Speth, who is stepping down in September, said the cost cuts would create ‘a more robust, resilient business’.
Photograph: Toby Melville/Reuters
Jaguar Land Rover has launched a £1.1bn round of cost cuts as Britain’s largest carmaker announced that Ralf Speth, its chief executive for a decade, would step down in September.
JLR said there were no additional redundancies planned at present, after previously announcing 5,000 job cuts. The fresh savings drive will focus instead on reductions in investment spending and material costs over the next year.
The latest cost cuts came despite JLR revealing a stronger performance during the last three months of 2019 on Thursday, with pre-tax profits of £318m and revenues up by 2.8% year-on-year to £6.4bn.
Speth launched the first round of cost savings in 2018 after JLR, which is owned by India’s Tata Motors, was caught up in the turmoil hitting the global car industry. The backlash against diesel following emissions scandals caused a slump in sales, while China’s car market has shrunk over the past two years. The slowdown in China – where JLR operates a plant in Changshu in a joint venture with Chery – prompted it to write down the value of its investments by £3.1bn in February 2019.
The carmaker appeared to arrest some of that decline in the final quarter of 2019, with Chinese sales rising by 24% year-on-year, although future results are likely to be affected by the recent coronavirus outbreak. Sales in the EU and UK fell by 10% and 12% year-on-year respectively as the carmaker contended with weak consumer confidence on top of Brexit uncertainty. Sales overall fell by 2.3% year-on-year.
The carmaker faces major investments in battery electric technology as it tries to catch up with rivals who are already transitioning away from fossil fuels. In July JLR announced it would invest more than £1bn to build a new electric version of its Jaguar XJ at the Castle Bromwich plant near Birmingham. That will add another electric car to its lineup alongside the Jaguar I-Pace SUV, which won multiple design awards but is built by a contract manufacturer in Austria.
Freeing up cash to invest in lower-emissions technology was given as a key reason for last year’s 4,500 redundancies, which contributed to savings of £2.9bn that JLR on Thursday said it had achieved so far. JLR also last week cut another 500 jobs at its Halewood factory near Liverpool as it ended its night shift.
Speth said: “Conditions in the automotive industry remain challenging but we are encouraged by the recovery in our China business and the success of the new Range Rover Evoque.”
He added that the cost cuts were creating “a more robust, resilient business” as he prepares to depart following a bumpy decade which saw JLR’s profits rise strongly on the back of growth in China and the US, before big losses forced an overhaul of the business.
A search committee has been formed to look for a replacement for Speth, who will remain on the JLR board as a non-executive vice chairman. He will also remain on the board of Tata Sons, the parent company of Tata Motors.
The Tata Motors chairman, Natarajan Chandrasekaran, said Speth, a former BMW and Ford executive who joined JLR in 2010, had moved the carmaker from a “niche UK-centric manufacturer to a respected, technological leading, global premium company”.