Jaguar Land Rover (JLR) today revealed plans to axe as many as 500 management roles in the UK. The move follows increasing sales and margin pressures due to recent US trade tariffs. The decision is still an indicator of the hard road the company must still travel as it works through a chaotic global automotive environment.
These latest cuts come on the heels of a JLR warning last month that it was cutting production and laying off more workers. The firm warned that US President Donald Trump’s decision to hit British cars exported to the US with a 10% tariff would damage its profitability. The carmaker makes its most famous models such as the Range Rover at its UK factories in Solihull, Wolverhampton and Halewood on Merseyside. It has suffered a steep drop – 18 percent – in sales over the three months preceding June. This dip was largely blamed on the stop in exports to the US as a result of the tariffs.
The recent UK–US trade deal cut the tariff on up to 100,000 UK cars to 10%. This amendment could not be more timely, given that over 90% of the vehicles JLR exported last year went to customers in Europe. Still, this new rate is a dramatic increase from the previous tariff of 2.5%. Professor David Bailey from the Birmingham Business School noted that these tariffs “play a big role” in the current job cuts.
Even with these headwinds, JLR is committed to investing £3.5 billion annually. This commitment is supported by the confidence reaped from the recently concluded USMCA trade agreement. A spokesperson for the Prime Minister acknowledged that JLR is “responding to challenging global conditions” in making these difficult decisions. They reiterated that layoff announcements are regrettable. In particular, they extended restrictions on employment protection, with PM declaring simply, “jobs saved, not job done.”
JLR already makes its highest-profile model, the Defender, in Slovakia. Even with all that innovation, it still encounters a serious 27.5% tariff when exported to the US. This additional burden further compounds JLR’s challenges. The firm has made clear that it is committed to stabilizing the company’s prospects in a distinctly boom-and-bust market.
As we have documented extensively, the automotive industry is undergoing a tectonic shift, evidenced by JLR’s current pie-in-the-sky fiscal health. Professor Bailey remarked, “It wasn’t that long ago that JLR was reporting bumper profits – £2.5 billion profit to the year ending in March – which was its best results in a decade.” The abrupt shift from previous years’ profitability to current realities speaks to a major crisis. To continue to exist, JLR needs to develop a new business model quickly to get there.