Bentley to Cut 1,000 U.K. Jobs in Recovery Plan After Virus

(Bloomberg) --

Bentley Motors Ltd. plans to slash as many as 1,000 jobs in the U.K., about a quarter of its workforce, to cut costs and contain the fallout of the coronavirus crisis after years of weak profitability.

The move adds to 2,000 other British auto-industry job cuts announced this week, while European car, truck and parts makers have set plans to eliminate almost 50,000 positions since the start of the Covid-19 outbreak, according to a Bloomberg News tally.

Volkswagen AG-owned Bentley intends to reduce headcount through voluntary measures but “cannot rule out future compulsory redundancies,” the Crewe-based manufacturer said in a statement on Friday. Car distributor Lookers Plc and Aston Martin Lagonda Global Holdings Plc said Thursday they will cut about 1,500 and 500 employees respectively.

The European auto industries have been hurt badly by the coronavirus pandemic, with factories and showrooms forced to close for several weeks as governments imposed lockdowns to contain the spread. Car sales collapsed in April, fared little better last month and are only expected to pick up as economies start to reopen in June.

U.K. showrooms reopened this week under strict social distancing rules, but demand remained tepid and the timeframe for a recovery is uncertain. Car sales in the country dropped 89% in May compared with a year earlier, worse than 50% declines in France and Germany.

“It is vital, even more so now with what is going on around us, that we look to the long-term future of Bentley,” Chief Executive Officer Adrian Hallmark said in the statement. “Covid-19 has not been the cause of this measure but a hastener.”

Bentley had previously struggled to improve earnings amid persistent uncertainty surrounding the U.K.'s plans to leave the European Union. It reported 65 million euros ($74 million) in operating profit last year as global deliveries rose 5% to 11,006 cars, after suffering a 288 million-euro loss in 2018.

Electric Models

As well as cost cutting, the restructuring is designed to accelerate development of new vehicles to meet stricter emission rules. Bentley plans to offer a hybrid-engine variant for every model by 2023 and launch its first purely battery-powered car in 2026.

Bentley had already trimmed or delayed investments, stopped hiring and released contractors across all business areas in response to the virus. As much as two thirds of its workforce was furloughed at peak lockdown, but weak growth projections meant job cuts became inevitable, according to the company.

“This is another heavy blow for our automotive industry and its dedicated workforce,” Steve Bush, a representative of U.K. trade union Unite, said in a statement. The plan to eliminate jobs “is heartbreaking for the workforce and their communities,” he said.