Jaguar Land Rover, Ford and Honda deliver triple dose of bad news for UK car industry

Thousands of job cuts and a post-Brexit production shutdown announced

Jaguar Land Rover, Ford and Honda delivered a triple dose of bad news for the UK car industry on Thursday.

JLR will cut 4,500 jobs, predominantly in the UK, while Ford is to cut thousands of jobs across Europe. Honda announced it will pause production at its Swindon plant in April in anticipation of border disruption after Brexit on 29 March.

JLR revealed the job cuts as part of a £2.5bn cost-cutting drive aimed at maintaining profitability as the company battles plummeting sales in China and confusion around diesel emissions rules.

China is a key market for the UK’s biggest car manufacturer but an abrupt economic slowdown in the country, exacerbated by a trade war with the US, has put the brakes on vehicle sales which fell 6 per cent last year. It was China’s first decline in new car sales for two decades and has hurt JLR more than rivals. The company said demand for its cars in China fell by 21.6 per cent in 2018.

An emissions scandal surrounding diesel cars has hit JLR harder than other manufacturers; 90 per cent of cars it sells use the fuel.

Tougher regulations on diesel cars, which emit more particulates than their petrol equivalents, have left manufacturers struggling to test all of their models. Diesel sales collapsed by 31 per cent in 2018 and have declined for 21 successive months.

The GMB Union said it will “keep a close eye” on developments.

“GMB is obviously concerned at the loss of 4,500 jobs worldwide from JLR but is somewhat reassured that the company will be seeking voluntary redundancies in the UK rather than compulsory,” said Joe Morgan, GMB regional secretary.

Longer-standing problems lay behind Ford’s decision to cut thousands of jobs across the UK and mainland Europe.

The US car manufacturer has struggled for years to turn a profit in Europe, posting a €245m loss in its third quarter. As part of a major plan to turn around its fortunes it said there would be a “reduction of surplus labour” across all of its business areas, without confirming specifics.

The headquarters of two divisions, Ford UK and Ford Credit, will be combined to a site in Dunton, Essex. The company will no longer produce multivans and will stop manufacturing automatic transmissions at a plant in Bordeaux. Operations in Russia are also to be reviewed.

Ford is in discussions with unions and has said it hoped job cuts could be achieved “as far as possible through voluntary employee separations”.

Group vice president Steven Armstrong said business changes could be “significantly more dramatic” in the event of a no-deal Brexit which would likely cause tariffs widespread disruption at ports.

Brexit logistics and border disruption were cited as the key reasons for Honda’s decision to shut down production at its Swindon factory for six days in April.

“To ensure Honda is well placed to adjust to all possible outcomes, we are planning six non-production days in April 2019,” a spokesperson said.

“This is to facilitate production recovery activity following any delays at borders on parts.”

Shutdowns are common during the summer in the car industry and are typically used to update and maintain equipment but they usually take place later in the year.

Like many car manufacturers, Honda relies on just-in-time deliveries from the EU. Last year, Ian Howells, senior vice president of Honda Europe, said border delays could cost the company tens of millions of pounds.