Jaguar Land Rover is set to axe thousands of jobs in the New Year, according to media reports, as the British automaker continues to contend with sluggish sales in China.
The company, which is also called JLR, will announce up to 5,000 job cuts in January, the Financial Times reported. JLR employs 40,000 people in the United Kingdom and has already cut 1,000 jobs this year.
Responding to the claims, JLR did not confirm or deny the job losses, and reiterated that the company is in the middle of a cost-cutting effort announced in November to combat heavy profit losses.
"Jaguar Land Rover notes media speculation about the potential impact of its ongoing 'Charge and Accelerate' transformation programs," JLR said in a statement. "As announced when we published our second-quarter results, these programs aim to deliver 2.5 billion pounds ($3.2 billion) of cost, cash and profit improvements over the next two years. Jaguar Land Rover does not comment on rumors concerning any part of these plans."
JLR, which is the largest British car manufacturer, reported pretax losses of 90 million pounds in the second quarter of this year, when retail sales declined by 13.2 percent on the same period in 2017.
This month, JLR revealed that November sales in China were down 51 percent on the same period last year, contributing to a global decrease in sales of 8 percent.
The company said that market conditions in China remain difficult due to "continuing consumer uncertainty" following "tariff changes and trade concerns".
"In China, we continue to see significant market challenges but we remain focused on taking all the operational actions necessary to balance production with demand," said JLR chief financial officer Felix Brautigam.
Over the summer, JLR suffered its first pre-tax loss since 2015 following a downturn in Chinese sales. JLR anticipated the slump would be short-lived because China had announced plans to cut import tariffs on new foreign vehicles, from 25 percent to 15 percent, from July.
However, domestic car sales in China failed to rebound, falling by 4 percent in July, 3.8 percent in August, and 11.6 percent in September compared to the same periods last year, according to the China Association of Automobile Manufacturers.
JLR said that trade tensions between the United States and China have impacted consumer confidence in China.
Beyond China, JLR is contending with a range of other challenges, including weakening demand in Europe for diesel engines, the European Union's introduction of new emissions and fuel efficiency procedures, and uncertainty brought on by the UK's looming exit from the EU.
The UK is scheduled to leave the EU in March next year however British Parliament is yet to vote on the Brexit deal negotiated by Prime Minister Theresa May and the 27 EU member states. The delay of the vote has fueled concern that the UK may end up leaving the EU without a deal in place.
The head of the UK Society of Motor Manufacturers and Traders, which is also called the SMMT, has warned that a so-called no-deal Brexit would be damaging to the British auto industry.
"We need a deal. No deal would be catastrophic. Plants will close. Jobs will be lost," said SMMT Chief Executive Mike Hawes.
