Jaguar Land Rover strengthens commitment to UK

Jaguar Land Rover (JLR) has decided to produce its new range of electric cars at its Castle Bromwich plant in the UK, safeguarding thousands of jobs in a sector that has seen many companies scale back amid Brexit uncertainty, according to a statement released on JLR's website on June 5. 

As JLR will invest close to £1bn ($1.23bn), according to the Financial Times, to get production under way from 2020 – starting with its flagship luxury saloon the XJ. The decision comes as good news for the UK following Honda and Ford announcing that they will close their UK factories in 2020.

Foreign investors in the automotive sector have shied away from the UK in recent years, as there are concerns over European market access after Brexit, and how the future UK-EU trading relationship will affect supply chains and just-in-time production.

In the 12 months to May 2019, the UK attracted 42% less inbound greenfield investment in the automotive component and OEM sectors than it did a year earlier, according to data from greenfield investment monitor fDi Markets. Despite a global decline in greenfield investment in the automotive sector, the UK performed far worse than the 6.58% fall across all countries in this time. 

The UK was also the worst performing greenfield investment destination in both automotive sectors in western Europe in the 12 months to May 2019. It attracted 37.8% less greenfield FDI projects than the same period a year earlier, while the region as a whole attracted 9.7% fewer greenfield FDI projects, according to fDi Markets. 

JLR's decision has garnered positive responses in the UK, such as from business secretary Greg Clark who said: “Today’s announcement is a vote of confidence in the UK automotive industry, protecting thousands of skilled jobs.”

In an official statement, JLR’s chief executive, Ralf Speth, asserted the British carmaker’s commitment to both electrification and manufacturing in the UK, saying: “Affordability will only be achieved if we make batteries here in the UK, close to vehicle production, to avoid the cost and safety risk of importing from abroad.”

Amid falling diesel sales and demand from China, JLR announced a £2.5bn cost-cutting drive in 2018 which included plans to cut global staff by 4500. Despite this, the British carmaker has reiterated its confidence in the world’s fifth largest economy with a new battery assembly plant due to open in 2020 between Birmingham and Coventry.

While many automotive sector investors have been losing confidence in the UK, Mr Speth said: “The UK has the raw materials, scientific research in our universities and an existing supplier base to put the UK at the leading edge of mobility and job creation.”