What's going on?
US carmaker Ford and Britain’s Jaguar Land Rover both applied sharp handbrake turns on Thursday – announcing job cuts in an effort to turn their businesses around.
What does this mean?
Ford’s trucks are all the rage in the US, but in Europe, it’s been struggling to find a path – and has been starting to lose money as well as market share in the region. Ford’s restructuring may see it shed thousands of jobs and even entire factories across the continent.
It’s a similar story at Jaguar. The UK’s largest carmaker plans to lose 4,500 of its 40,000 UK workers as part of a turnaround plan first announced after the firm’s fortunes declined sharply last year and it too began to lose money. Jaguar cited Brexit uncertainty and slowing demand from China for its sluggish sales.
Why should I care?
For markets: Cars are settling into a lower gear.
Figures out this week showed UK car sales falling for the second year in a row, seeing their largest drop since the 2008 financial crisis. And car sales in China, the world’s biggest vehicle market, declined for the first time in 20 years as economic growth there slowed (tweet this). None of this, however, stopped Germany’s Volkswagen from selling a record number of cars in 2018. 2019 could be crucial for auto traders: analysts expect the number of cars sold in the US to decline as tax cuts dry up and higher interest rates choke consumer spending. That’s just the way it goes in “cyclical” industries.
The bigger picture: Red light at the turnoff to transport’s future.
Several companies are aiming to bring electric (and/or autonomous) cars into the mainstream – and ride-hailing rivals Uber and Lyft are betting on millennials increasingly shunning ownership altogether. Both companies have initial public offerings planned for 2019 – but they might find the traffic jammed. With parts of the US government stubbornly shut down, regulators have yet to respond to the two companies’ paperwork, leaving their applications stranded on the turnpike.