Jaguar Land Rover to cut 5,000 jobs amid slump in diesel sales and Brexit uncertainty

British carmaker hit by falling diesel demand and poor sales in China

Nine in 10 cars JLR sold last year in the UK were diesels, making it the car manufacturer that is most exposed to a government crackdown (AFP/Getty)

Jaguar Land Rover is set to cut thousands of jobs as part of a £2.5bn cost-cutting drive as it battles falling sales of diesel cars, weak demand in China and Brexit uncertainty.

Up to 5,000 staff could be made redundant in the new year – one in eight of JLR’s workforce – the Financial Times reported. A JLR spokesperson would not confirm details of the reported plans.

The British carmaker cut 1,000 agency staff at its Solihull plant earlier this year and a further 1,000 permanent employees are working a three-day week until Christmas as production is scaled down.

The company is struggling from a 30 per cent slump in sales of diesel vehicles, which have been linked to high levels of air pollution. Nine in 10 cars JLR sold last year in the UK were diesels, making it the car manufacturer that is most exposed to a government crackdown.

In October, JLR outlined an 18-month blueprint for cutting costs and improving cash flow but did not reveal how many jobs would go as a result.

JLR’s boss Ralf Speth has warned of a further negative consequences from a bad Brexit deal which he said could cost the company £1.2bn a year and put tens of thousands of British jobs at risk.

The company is facing a “very, very difficult situation”, said Mr Speth after unveiling a £354m loss in the half-year to October. Sales in China, seen as a key growth market, plummeted 44 per cent.

The latest news adds to woes at the UK’s biggest carmaker which produced 532,107 vehicles last year and had until recently been on an almost uninterrupted upward trajectory since being taken over by India’s Tata Motors in 2008.

The Unite trade union criticised the government’s “demonisation of diesel”, adding: “Unite will continue to press the carmaker for assurances over the jobs and skills of our members who have worked tirelessly over the past decade to make the company the global success story it is today.”

A JLR spokesman said: “Jaguar Land Rover notes media speculation about the potential impact of its ongoing charge and accelerate transformation programmes.

“As announced when we published our second quarter results, these programmes aim to deliver £2.5bn of cost, cash and profit improvements over the next two years. Jaguar Land Rover does not comment on rumours concerning any part of these plans.”