Jaguar Land Rover owner Tata Motors posts thumping loss in another blow to UK car industry buffeted by Brexit
The news bodes ill for workers at its British operations, which already face questions over Brexit
Anyone with an interest in the future of Jaguar Land Rover in Britain should have felt a chill this morning.
The vehicle maker’s Indian owner, Tata Motors, stunned the markets by posting the biggest quarterly loss in Indian corporate history having racked up a deficit of $4bn (£3bn). Investors immediately took flight, with the shares falling by 30 per cent.
Jaguar Land Rover, which generates most of its revenue, will swing into the red in the year to March with the business, which had been hoping for a break even, set to report a full year loss as a result of weak sales. It has been hit with a business tsunami.
The Chinese economic slowdown saw retail sales in that country halve in December as the car market there contracted for the first time since the 1990s, at a time when the company is already grappling with Europe’s shift away from diesel.
Oh, and there’s Brexit. Sorry, but you just can’t avoid that one given the company’s important presence in the UK.
Tata can’t solve China’s economic issues, but can at least address some of the other problems it faces there. It is doing that by altering its strategy and how it operates, which makes sense.
As regards Europe, well the answer is obviously to shift focus away from diesel.
At the same time, the company is going to book itself in for the sort of surgery that every company in its situation goes through: Cost cutting and other measures to boost competitiveness.
This is where Brexit comes in. It is fashionable among Brexiteers to blame anything but their project when companies like Tata Motors shudder and the UK gets caught in the backwash. We witnessed this when Nissan shifted a new model that it had been planning to build in Sunderland to Japan, which has just fixed a free trade deal with the EU and so will be able to export tariff free to the bloc. That’s a privilege that will be denied Britain if it exits without a deal, as seems increasingly likely.
Up popped the Brexiteer empty heads, the ones that always make the most noise, to point to the ongoing scandals surrounding former boss Carol Ghosn, and the slump in the diesel market, which is a big problem for Nissan too.
They were correct in one respect. Brexit is not the sole problem facing either company. But it is still a problem that has to be addressed alongside the others. And it’s far easier to fix: You do it by diverting investment to places where it isn’t an issue and help with reducing costs and boosting competitiveness.
Jaguar has already announced 4,500 job cuts in the UK this year, and has been one of the more vocal companies in sounding the alarm over the government’s inexorable drift to a no-deal cliff edge.
When its bosses meet to discuss what next, to decide where to swing the axe and where to channel investment, Britain is more likely to be at the top of the former list than the latter because of Brexit and the way it has been handled by this country's political class.
So no, Brexit is not Jaguar's only problem, nor is it the biggest. But in the midst of the corporate turmoil created by heavy losses, it will be addressed to the detriment of the people that work there and the UK’s faltering economy and future.