Jaguar Land Rover Launches $6.8 Billion Cost-Cutting Plan

Illustration for article titled Jaguar Land Rover Launches $6.8 Billion Cost-Cutting Plan
The Morning ShiftAll your daily car news in one convenient place. Isn't your time more important?

Good Morning! Welcome to The Morning Shift, your roundup of the auto news you crave, all in one place every weekday morning. Here are the important stories you need to know.


1st Gear: More Cars, Less Costs At JLR

Jaguar Land Rover as a whole has one of the most impressive lineups in the car world at the moment, but even they’re facing headaches over China’s luxury slowdowns and ever-more aggressive emissions targets. So here comes a big cost cutting plan, first reported by the Sunday Times and echoed here by Reuters:

British luxury carmaker Jaguar Land Rover has launched a secret project to cut costs of 4.5 billion pounds ($6.8 billion) and build 1 million cars per year by the end of the decade, the Sunday Times reported.

The project, called Leap 4.5, will entail building more models on similar core skeletons, overhauling the carmaker’s supply chains and slowing down or halting the recruitment process, although there are no plans for redundancies, the paper reported citing people familiar with the matter.

Sales in China, JLR’s fastest-growing market, have fallen 32 percent this year. Ouch.

2nd Gear: Nissan Drops Takata Too

Over the past week more and more automakers have announced they will stop using parts from beleaguered supplier Takata, which made airbags with defective inflators now linked to eight deaths and more than 100 injuries. On Saturday, Nissan joined the party too. Here’s Reuters again:

Nissan joins most major automakers, including Toyota Motor Corp and Honda Motor Co that decided to stop using Takata’s inflators that have led to extensive recalls around the world.

“We have decided to no longer use (Takata’s) inflators containing ammonium nitrate in airbags for future models,” Nissan said in a statement.

Takata is not in great shape these days.

3rd Gear: Big Week For The UAW, GM And Ford

On Friday Ford and the United Auto Workers union reached a tentative labor contract agreement. That deal is likely to be approved by leadership today and then sent to union members for ratification this week.


Also this week: the union will try to figure out why certain General Motors workers voted no on their contact. Here’s The Detroit News:

Labor leaders at Ford Motor Co. will convene at 10 a.m. Monday at the UAW-Ford National Programs Center on Jefferson in downtown Detroit to accept or reject a proposed tentative deal that the union and Dearborn automaker agreed to Friday afternoon.

Also this week, the union will meet with its skilled trades workers at General Motors Co. plants to determine why 59.5 percent of those workers voted “no” on the GM contract. In contrast, 58.3 percent of GM production workers voted “yes,” and, overall, 55.4 percent of all workers voted to approve the contract. Ratification of the pending GM deal was delayed Friday because of the skilled trades rejection.


The newspaper reports the “UAW can overrule a rejection by skilled trades workers if the union finds they voted against it for reasons other than issues unique to skilled trades.”

4th Gear: Too Many Incentives?

As regular Morning Shift readers know, car sales have been completely off the chain in 2015, shattering records and likely headed toward 18 million new cars sold by the year’s end. But how much have discounts and incentives played into that?


Too much so, some worry. Here’s Automotive News:

On average, automakers doled out $3,104 in incentives per vehicle sold in October, according to TrueCar. That’s an increase of 14 percent from a year ago and equal to 9.5 percent of the industry’s average transaction price of $32,529.

That seems high, some analysts say.

[...] If incentives continue to rise, they’ll exceed 10 percent of average transaction prices, the point at which “they start to unravel value for the industry” and start pulling down used-car prices, residual values and new-car prices, Lyman said.


5th Gear: Does VW’s New Leadership Have A Handle On The Problem?

The Volkswagen Group’s management structure was overhauled in the wake of Dieselgate, but as the scandal grows to encompass more engines used by Audi and Porsche as well, and even some gasoline cars, analysts question whether that new team can really handle this crisis. Once more from Automotive News:

But VW’s troubles have spread rapidly since to multiple fronts. Fresh EPA charges of emissions-rigging in the U.S. tarnished the vaunted Porsche brand and cast a larger shadow on Audi, which had largely escaped infamy. VW’s own investigation has found inaccurate emissions ratings assigned to some 800,000 cars, not all of them diesels.

Analysts now expect more painful revelations to come as internal and external investigations escalate. And in the absence of clear clues about a fix, a compensation plan or the progress of VW’s investigation, they’ve begun to question whether VW’s revamped executive team has enough of a handle on the spiraling crisis.


And regarding former Porsche, now VW CEO Matthias Mueller:

Now that Porsche also is embroiled in the scandal, Mueller himself could be on the hot seat. He ran Porsche for almost six years.

“As far as the U.S. justice officials, it’s going to be much more difficult for Mueller to credibly lead Volkswagen’s efforts to uncover the fraud behind the scandal,” said Ferdinand Dudenhoeffer, head of the Center for Automotive Research at the University of Duisburg-Essen in Germany.


Reverse: One Of The Whiz Kids


Neutral: Did You Get Discounts Or Incentives On A New Car?

And if so, what were they? Do you see over-incentivizing as a problem?

Contact the author at


Tom McParland

Neutral: There were a lot of model redesigns and refreshes this year so the increase in incentives is really a temporary thing, and mostly a tool to move the previous body style out of the showrooms. For example, Honda that does not typically offer a lot of factory cash was throwing serious money at the ‘15 Accord to get it off the lot to make room for the refreshed ‘16. BMW was in a similar position for the 3 series.

Also, Audi is giving some killer discounts on their models with the whole dieselgate situation and the stop sale on TDI models. I had a client lease a very well equipped A3 Quattro for only 260/mo with 2500 down. I’m also seeing very competitive lease quotes on the Q5 compared to other luxury cars with a similar MSRP.

So if you are in the market for a new car, now is a good time to be shopping.