Ford Motor Co. said it will cut thousands of jobs, weed out slow-selling variants and potentially close entire factories in Europe, as the carmakers’s global cost-cutting drive targets a region that has been a drag on earnings for years.
The overhaul marks another sign of pressure on traditional automakers as they grapple with fundamental technology changes, tougher environmental regulations and trade tensions. Tata Motors Ltd.’s Jaguar Land Rover, formerly part of Ford, plans to cut 4,500 jobs in response to a sales slowdown.
Ford’s debt has been trading like it’s speculative grade, and Moody’s Investors Service cut the carmaker’s credit rating to one step above junk in August. The stock traded below $8 late last year for the first time since November 2009, the year its Detroit peers General Motors and Chrysler went bankrupt. Analysts have speculated Ford’s generous dividend may be at risk.
Volkswagen AG, which is in talks with Ford about a deeper alliance, said Thursday its namesake brand will redouble its focus on returns amid another year of “enormous challenges,” foreshadowing more belt-tightening. Audi, VW’s biggest profit center, likewise noted more struggles ahead, reporting a 3.5 percent drop in sales last year.
Ford’s European business, which relies on models like the recently revamped Fiesta and Focus hatchbacks, reported a $245 million loss during the third quarter, widening from $192 million a year earlier. Similar to America, Ford will swing to a lineup of crossovers and SUVs, and drop several derivatives to streamline its offering, Armstrong said.
Speaking of Jaguar:
Jaguar Land Rover plans to slash 4,500 jobs worldwide, as the U.K.’s biggest automobile maker responds to the sales slowdown caused by Brexit, flagging demand for diesel-powered vehicles and a downturn in China.
The cuts, representing roughly 10 percent the company’s workforce, are part of a 2.5 billion-pound ($3.2 billion) push announced last year to reduce costs and boost cash flow through 2020. They come on top of the 1,500 people who left in 2018, the company said Thursday in a statement.