UK Luxury Automaker Bentley To Slash 1,000 Jobs, Postpones Electric Vehicle Delivery

British-based luxury carmaker Bentley Motors plans to slash up to 1,000 jobs – nearly a quarter of its workforce – as the covid-19 pandemic has sapped demand.

Bentley offered its staff at its headquarters in Crewe, Cheshire the chance to take voluntary redundancy.

The company said it has to "significantly reduce the size of the organization through a voluntary release program” and that it "cannot rule out future compulsory redundancies.”

"Losing colleagues is not something we are treating lightly but this is a necessary step that we have to take to safeguard the jobs of the vast majority who will remain, and deliver a sustainable business model for the future," said Bentley's Chairman, Adrian Hallmark.

Even prior to the emergence of the pandemic, Bentley, which is owned by Volkswagen Group of Germany, had struggled. As such, Hallmark, said the coronavirus was not the cause of the job cuts, but rather a "hastener.”

Bentley’s new strategy is to make the firm the "leader in sustainable luxury mobility for the next 100 years,” with an "accelerated journey towards electrification with every model.”

The Unite union lamented the job cuts

“This is another heavy blow for our automotive industry and its dedicated workforce,” said Unite's national officer for the automotive sector Steve Bush. “Bentley is a name known around the world for the quality of its vehicles, thanks in large part to the expertise of this highly dedicated and superb workforce. To ask 1,000 of them to leave the company, albeit on voluntary terms, is heartbreaking for the workforce and their communities. We are determined to support our members during this process to do what we can to mitigate the jobs lost."

Unite added: “It is absolutely essential that the government works with the automotive industry and Unite to bring forward the sort of sector- specific support we are seeing other governments deliver, in France and Germany, because for every automotive job that goes, four more will go in the wider supply chain.”

Bentley becomes the latest in a wave of British and European carmakers cutting jobs in response to reduced demand – on Thursday Aston Martin said it will eliminate up to 500 jobs. McLaren Group said in May it will cut 1,200 positions. Car dealership firm Lookers said on Thursday that it will axe about 1,500 jobs and close 12 showrooms. Last month Renault of France said it seeks to cut nearly 15,000 jobs.

Bentley’s fortunes have been erratic in recent years. In 2018 after the company posted a loss of 288 million euros ($326 million) -- primarily due to the delayed introduction of the redesigned Continental GT vehicle – Bentley embarked on a restructuring plan. The strategy succeeded – in 2019, sales jumped by 5% and the company recorded a profit 65 million euros ($74 million).

The company also delivered a strong first quarter in 2020 – it was in fact the only Volkswagen division to show a sales increase during the quarter and posted an operating profit of 56 million euros ($63 million). But that was before the covid-19 pandemic shattered the auto industry.

Bentley also ceased production of its Mulsanne vehicle, along with the well-known L-series V-8 engine.

Bentley now expects its revenue to be cut by 25% to 30% this year due largely to the shutdown.

"It has embedded a loss into this year that whatever we do in the next five months you cannot then repay," Hallmark said.

During the two-month shutdown, Bentley was losing 88 million pounds ($111 million) per month.

Bentley also laid off "several hundred" contractors working at the Crewe plant when the lockdown commenced.

Bentley also announced it will postpone its introduction of a battery-electric vehicle, or BEV, to 2026 from 2025.

"The ambition to have the first BEV by 2025 does not change, but with the COVID-19 crisis there could be some slippage," Hallmark said. "The short-term shock does not help because we planned to generate more cash to be able to pre-invest in the next generation [of models]."