Emission cut, China slowdown: JLR drafts 4.5 bn pound cost cutting plan

Rajesh Pandathil November 09, 2015 09:53:19 IST
Emission cut, China slowdown: JLR drafts 4.5 bn pound cost cutting plan

Tata Motors-owned Jaguar Land Rover has drafted a new 4.5-billion pounds cost-cutting plan to offset rising emissions cost and the slowdown in China, one of the biggest automotive markets in the world.

The project known as Leap 4.5 will scrutinise almost every area of spending at Britain's luxury car manufacturer, The Sunday Times reported.

Emission cut China slowdown JLR drafts 45 bn pound cost cutting plan


The 3-billion-a-year pounds capital budget, focused on research and development and new plants, will be spared.

JLR has one of Britain's biggest success stories since it was bought over by Tata Motors from Ford in 2008 and made 2.6-billion pounds profit last year, has almost 37,000 staff and builds about 500,000 cars a year.

It has spent around 11 billion pounds on a new range of cars, built plants in China and India, with another under way in Brazil, and has overhauled its three British manufacturing plants. It aims to build one million cars a year by 2020.

Sources close to JLR told the newspaper it was a natural time to take stock after such rapid growth and insisted that there were no plans for redundancies.

Sales in China from July to September were down by a third year-on-year to 20,149 cars, against a wider market fall of 1.9 percent. That drop was offset by strong growth in America and Europe.

It also faced a 245-million pounds charge on 5,800 vehicles damaged in the huge explosion at the Chinese port of Tianjin in August.

As well as the Chinese problems, JLR faces pressure from regulators to cut its emissions or face hefty fines, The Sunday Times said.

It has largely switched from steel to aluminium bodies, which lead to lower fuel consumption, but tougher emissions rules will require costly upgrades to models.

Leap 4.5 targets 4.5 billion pounds of cumulative savings by the end of the decade. It is likely to see more models built on similar core skeletons, greater efficiency in manufacturing, supply chains overhauled and recruitment slowed or halted.

The company has repeatedly stressed that it will continue the 3 billion pounds-a-year spending on R&D and new plant and equipment. JLR is yet to comment or confirm on the reported cost-cutting plans.


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