Jaguar Land Rover said it’s seeing the beginnings of a demand rebound in China as the world’s second-largest economy opens up after months of inactivity following the coronavirus outbreak.
While JLR lost 501 million pounds ($630 million) before tax in the three months ended March 31, sales in China gained 4.2% in May from a year earlier as all of its retailers there reopened for business, according to in a statement Monday. Britain’s largest carmaker is also seeing improvements in the U.S. and Europe, though the U.K. and other countries have yet to recover from lockdowns.
JLR will still cut 1,100 contract workers engaged in manufacturing across various factories to help hold down costs. The unit of India’s Tata Motors Ltd. held off eliminating permanent posts among its 38,000 workers. JLR is tapping the British government’s furlough scheme as it assesses how fast demand is likely to revive.
“In China, we are beginning to see recovery in vehicle sales and customers are returning to our showrooms,” Chief Executive Officer Ralf Speth said in the release. The company is gradually resuming production at its main Solihull and Halewood factories in the English Midlands, as well as at U.K. engine plants and its sites in Slovakia and Austria.
After struggling in China and dealing with uncertainty around Brexit, JLR initiated a 2.5 billion-pound cost-cutting drive that has already featured thousands of job losses worldwide. The plan, called Charge, has now been expanded to target savings of 5 billion pounds by March 2021, it said.
The U.K. manufacturer said it is reducing capital spending by about 25% by deferring “lower margin” and non-critical investments. It had a negative 1.5 billion-pound cash flow in April and May with its facilities shuttered-Bloomberg
