Jaguar Land Rover, owned by India's Tata Motors, today said it will cut 1,000 jobs and reduce production at two units as the UK's biggest carmaker blamed Brexit, slumping sales of diesel vehicles and regulatory issues for its woes.
Jaguar sales have fallen 26 per cent and Land Rover dropped 20 per cent this year and the company said it will not be renewing the contracts of 1,000 temporary workers at two factories.
Jaguar Land Rover employs about 40,000 workers in the UK and produce over 500,000 vehicles a year.
A company spokesman confirmed that 1,000 agency staff at Solihull were not having their contracts renewed.
Meanwhile, 362 permanent staff will be transferred from another West Midlands site, at Castle Bromwich, to Solihull.
Demand for Jaguar Land Rover cars has also fallen in Europe due to fallout from the diesel emissions scandal.
Jaguar Land Rover pointed out that "the huge drop in demand in diesels" led to its decision not to renew the contracts of 1,000 workers.
The JLR blamed "continuing headwinds" affecting the car industry for its decision.
Earlier this year, it said it would cut production amid uncertainty over Brexit and changes to taxes on diesel cars.
JLR was very exposed to the demise of diesel. Recent figures from the trade body showed sales of diesels fell a whopping 37 per cent in March compared with the previous year.
Unhappily for JLR, 90 per cent of its vehicles are powered by diesel engines and there are critical industry voices that say they have been slower than their rivals to embrace hybrids and electric, the BBC reported.
JLR said in a statement on Friday that it was making adjustments to production schedules and the levels of agency staff "in light of the continuing headwinds impacting the car industry".
Industry figures show continuing declines in UK car production mainly thanks to steep falls in domestic demand, while there are also concerns about how exports may be affected by any trade barriers which could be thrown up by Brexit.
The UK has voted to leave the 28-member European Union. It is scheduled to depart on March 29, 2019. Complex talks are now moving on to future relations - after agreement was reached on a 21-month "transition" period to smooth the way to post-Brexit relations.
Shares of Tata Motors on the Indian exchanges today settled nearly 5 per cent down on JLR's job cut plans in the UK.
Company's scrip opened at Rs 351.50, then fell to an intra-day low of Rs 337.90 and finally settled for the day at Rs 338.95, down 4.96 per cent over its previous close.
On the NSE, the stock had fallen to an intra-day low of Rs 337.55, then recovered some lost ground and finally settled at Rs 340, down 4.78 per cent.
JLR chief executive Ralf Speth had previously pointed to weakness in the economy as well as a drop in demand for diesel and tax changes for creating a "reaction in the consumer base".
In January, the firm said it would temporarily reduce production at another British plant, at Halewood.
Asked in March if there could be further UK production cuts, Speth told Sky News: "It's quite clear that if there's no demand, then we have to adapt our production levels.
Commenting on JLR's decision, Professor of industry, David Bailey, from Aston University, said: "With the big turn against diesel engines, Jaguar Land Rover is particularly exposed as more than 90 per cent of its UK sales are diesels.
"JLR has just revealed its full-electric i-Pace model and have indicated offering all-electric or hybrid variants of all their models by around 2021, but they have been far too slow compared with Tesla and BMW," Bailey was quoted as saying by the BBC.
He said the problems caused by Brexit were also unlikely to be solved in a timely manner: "It's hard to say how long this production uncertainty will continue around Brexit negotiations, because it's still unclear what the trading relationship will be between the UK and EU with regards to tariffs.
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