Jaguar Land Rover (JLR) is preparing to offer voluntary redundancies to thousands of employees as the British luxury carmaker battles a combination of fierce competition from cheaper Chinese manufacturers, the fallout from a cyberattack and the impact of U.S. tariffs.
The company, owned by India’s Tata Motors, is reportedly planning to cut as many as 4,000 jobs over the next two years, according to The Times. The potential reductions would represent a major restructuring of the company at a time when the global automotive industry is undergoing significant change.
While JLR declined to confirm the number of positions that could ultimately be lost, the company said it had informed employees and trade union representatives about plans to introduce a voluntary redundancy programme.
A JLR spokesperson said the initiative would give “salaried and management team members the opportunity to leave the business.”
The announcement comes as JLR seeks to reduce costs and strengthen its finances amid increasingly difficult trading conditions. The manufacturer said it is targeting approximately £1.7 billion ($2.3 billion) in savings over the next two years and wants to lower its break-even point to 300,000 vehicles.
The company said it must make significant changes to its operations to remain competitive in a rapidly evolving global market.
“To achieve this, we must further simplify our organisation, improve efficiency, and build greater resilience,” the spokesperson said.
For workers, however, the restructuring could bring uncertainty to thousands of families and communities that depend on the automotive industry. Voluntary redundancy schemes can reduce the need for compulsory layoffs, but they nevertheless signal a substantial reduction in the size and cost of a business.
The developments also place additional pressure on Britain’s wider automotive sector, which has been grappling with weak demand, rising production costs, the transition to electric vehicles and growing competition from Chinese carmakers.
JLR’s parent company, Tata Motors, saw its Mumbai-listed shares fall 0.7% on Monday, although the stock remains about 9.5% higher so far this year.
The latest cost-cutting programme is also expected to attract political attention, particularly as the British government attempts to support the country’s strategically important automotive manufacturing base.
U.K. Business and Trade Minister Jonathan Reynolds, who ruled out a bailout for JLR over the weekend, is expected to meet company executives early this week to discuss the redundancy plans.
The government acknowledged the anxiety likely to be felt by employees facing an uncertain future.
“We understand that this will be an uncertain and concerning time for affected workers, their families and wider communities,” a government spokesperson told CNBC by email.
The government pointed to measures it says are designed to strengthen Britain’s automotive manufacturing industry, including lower electricity costs for manufacturers, funding for zero-emission vehicle production and incentives for consumers to purchase electric cars.
“We have taken significant action to back the UK automotive industry by lowering electricity bills for manufacturers, providing £4 billion of capital and R&D funding to manufacture zero emission vehicles and launching a £2 billion Electric Car Grant to encourage people to buy EVs,” the spokesperson added.
JLR’s difficulties reflect a wider crisis confronting established European carmakers. Manufacturers are under pressure to invest heavily in electric vehicles while simultaneously protecting their traditional businesses, controlling costs and competing with increasingly sophisticated Chinese brands.
German automotive giant Volkswagen also announced late last week that it plans to eliminate a further 50,000 jobs as part of a historic transformation programme. The company cited tariff pressures and intensifying competition from Chinese carmakers among the challenges facing the business.
For JLR, the planned voluntary redundancies mark another significant step in an effort to reshape the company for a more volatile global market. The coming months will determine how many employees ultimately leave and whether the cost-cutting measures can deliver the savings needed without weakening the company’s ability to compete in the increasingly crowded global luxury-car market.