Jaguar boss leaves after just 18 months in the top job

Surprise in industry at the abrupt departure of JLR's chief executive David Smith

Jaguar Land Rover's chief executive David Smith stepped down with immediate effect yesterday.

Ravi Kant, a director of the group's holding company, JaguarLandRover Limited, will assume day-to-day responsibility for the company. "The company would like to thank David for his efforts in the role and for his service to Jaguar and Land Rover over many years," the group said.

The precipitous departure was a shock to the car industry. Garel Rhys, at Cardiff Business School, said: "This is an unexpected development. David Smith was widely thought to be earmarked for great things in the company. He has been in situ while some decent new products have been introduced and market share has been inching upwards."

Mr Smith's 18-month reign at JLR has been unusually tempestuous. After 25 years at Ford, Mr Smith was part of the team that worked on the £1.4bn deal selling JLR to the Indian group Tata Motors in 2008. He stayed on as the finance director at JLR, only to be pitched into the top job just months later, when his predecessor, Geoff Polites, died of cancer.

Almost immediately, the car industry was knocked sideways by the global recession, and JLR's sales plummeted. By January, the company had cut 450 jobs, reduced hours and frozen pay. By March, Jaguar sales were still down by 30 per cent compared with the previous year, and Land Rover was down by 37 per cent.

From late 2008 onwards, Mr Smith was locked in negotiations with the Government over aid. But the discussions led nowhere, and although the company was eventually deemed eligible for £340m from the European Investment Bank – through the UK Government's aid package – the Government's terms for its guarantee proved so onerous that the deal was scrapped.

Sales have improved in recent months and although JLR still reported losses of £60m in its second quarter, they were a vast improvement on the previous year's £240m black hole.

But plans announced to cut new employees' wages by 20 per cent and close the final salary pension scheme to new members – in return for a guarantee of no further job cuts until 2015 – have caused controversy with the company's trade unions and remain unresolved. It has also announced plans to close one of its two factories by 2014.

Mr Smith is an unusual personality for the car industry. His reputation is for a fearsome intellect, but he is low-key – even shy – compared with the brash characters more common in the sector.