How Jaguar Land Rover turned a profit after torrid year

Jaguar Land Rover has returned to profitability following the introduction of a radical restructuring programme that saw thousands of jobs axed earlier this year.

The British marque recorded an 8% increase in revenue to £6.1bn in the three months to the end of September, The Sunday Times reports.

And pre-tax profits surged to £156m - “a sharp reversal from a £90m loss a year earlier”, the newspaper notes.

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The turnaround comes after the company posted losses of £3.6bn during the 2018-2019 financial year, with the slump attributable to “a shift away from diesel models” and “falling demand in China”, according to The Daily Telegraph.

How has JLR got back in the black?

The pendulum has swung back in JLR’s favour following the launch of key new models and an extensive cost-saving programme that included 4,500 job cuts across the company in January.

A key part of the reversal of fortunes is JLR’s rapid growth in China, a region that had proved tricky to crack.

While rival firms BMW, Mercedes-Benz and Audi all made gains in China in 2018, JLR’s sales fell by 22% amid “quality issues and an unruly dealer network”, says Autocar.

JLR commercial chief Felix Brautigam told the magazine that the carmaker realised there was “room for improvement” in its retail network in China to “get them on the highest level”.

“What we do right and wrong now will influence us in China for the next 15 to 20 years,” he continued.“I feel we’re gaining traction and getting better in sync to the market, but it’s still declining [as a whole] and facing headwinds on a macro level.

“It’d be nice if we had a tailwind but it’s a tough environment.”

Difficulties aside, the company logged a 24.3% year-on-year increase in Chinese sales, despite global retail sales falling by 0.7%.

But the long-awaited boom in China isn’t the only factor behind the company’s resurgence.

Land Rover’s new Range Rover Evoque SUV has proved popular among car buyers, with retail sales increasing by 54.6% year-on-year. The Range Rover Sport also sold well, with sales climbing by 17.5%.

In addition, JLR is feeling the benefits of its “Charge and Accelerate” plan, a cost-cutting scheme designed to save £2.5bn by the end of the company’s financial year in March 2020.

As of the end of September, the programme had delivered £2.2bn in savings, though at the expense of the 4,500 jobs cut. Those redundancies came of top of an additional 1,500 job losses announced last April, before the cost-saving programme was introduced.