Braking Bad

Ford and Jaguar announced major job cuts

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What's going on?

US carmaker Ford and Britains 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?

Fords trucks are all the rage in the US, but in Europe, its been struggling to find a path and has been starting to lose money as well as market share in the region. Fords restructuring may see it shed thousands of jobs and even entire factories across the continent.

Its a similar story at Jaguar. The UKs largest carmaker plans to lose 4,500 of its 40,000 UK workers as part of a turnaround plan first announced after the firms 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 worlds biggest vehicle market, declined for the first time in 20 years as economic growth there slowed (tweet this). None of this, however, stopped Germanys 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. Thats just the way it goes in cyclical industries.

The bigger picture: Red light at the turnoff to transports 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.

Originally posted as part of the Finimize daily email.

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