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The easy times are over for the European automakers. They had groped their way out of the hole created by the 2008 financial crisis and now they’re slipping back into it again as the global auto industry faces its greatest upheaval in decades. The Brexit mess hasn’t helped.

On Thursday morning, Ford Motor’s European division confirmed it would launch a deep restructuring that will see thousands of workers lose their jobs across the continent as plants are shut and models discontinued, though the company would not provide details of the expected job cuts. “This is not about making the business today more efficient but completely redesigning it,” Steve Armstrong, Ford’s European president, told the Financial Times.

Jaguar Land Rover (JLR), the luxury car and SUV maker that is owned by India’s Tata Motors and is Britain’s biggest auto maker, is also feeling the pain. It announced today that it would cut 4,500 jobs, mainly in its home market. JLR, which used to be owned by Ford, is losing money, is in dire need of new investment and made the mistake of arriving late to China, the world’s top auto market.

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The moves at Ford Europe and JLR come two years after General Motors pulled out of Europe – it sold its European division to Peugeot owner PSA Group of France – and less than two months after GM announced a broad restructuring that will see it shut five factories in the United States and Canada, including the assembly plant in Oshawa, Ont., where almost 3,000 workers will lose their jobs. The three-way alliance of Nissan, Renault and Mitsubishi – collectively the world’s top automaker – could also face upheaval now that the alliance’s boss and driving force, Carlos Ghosn, is behind bars in Japan where he awaits trial for financial misdeeds, including allegations that he underreported his salary.

Propelling the automakers' woes is the industry’s apparent cyclical slowdown combined with phenomenal investments needed to launch electric and self-driving cars, with no certainty that such vehicles will ever make money.

China looms as the big worry among automakers. Those who got into China early, such as Germany’s Volkswagen, made fortunes as sales soared year after year. But China is now going into reverse – auto sales fell 6 per cent in 2018, their first drop in two decades, and they could keep falling. RBC Capital Markets thinks the global auto industry is headed for a downturn. Last month, RBC analyst Joe Spak noted that worldwide light-vehicle output fell 2.9 per cent in the third quarter. He expects a 4-per-cent drop in the fourth quarter, marking the first back-to-back drop since the deep recession of 2009. China isn’t the only problem. Millennials are showing scant interest in car ownership.

Even as sales decline, throwing profit projections out the window, the demand for new investment is proving relentless. Reuters reported on Thursday that global automakers plan to spend about US$300-billion on electric cars alone in the next five to 10 years, more than triple what they had expected to spend only a year ago and equivalent to the gross domestic product of Chile.

But the investment is highly risky. Electric cars are still niche products and are generally not profitable for automakers. There is little sign that they will achieve a mass-market breakthrough any time soon, because of their high expense, relatively short range and the lack of recharging stations. Self-driving autos are an even riskier investment. Already, car makers are rolling back the launch of their fully autonomous car ambitions because of safety concerns.

All these factors are affecting Ford Europe, plus one other biggie – Brexit.

While European Fords are mostly made in Germany and other parts of continental Europe, they were always hot sellers in Britain where, even today, Ford is the top brand by a long shot (the Ford Fiesta is Britain’s favourite car, with sales of some 100,000 units a year). Even if Ford lost money on the continent, it knew Britain would take up the slack.

Most Fords in Britain leave the showroom through financing schemes. Ford had been gambling that the pound would recover strongly after the 2008 financial crisis, which it did. But the 2016 Brexit referendum sent the currency spiralling down again. That meant that cars returned after their three-year lease had a lower asset value than Ford had expected.

Ford’s European restructuring is part of the company’s global effort to cut costs by US$14-billion. Every part of the European business is to come under review and Brexit, should it go ahead in March, as planned, could severely damage the fortunes of Ford’s two manufacturing sites in Britain.

The bad news is unlikely to end with Ford and JLR. So far, the German automakers have emerged largely unscathed in spite of the horrendous costs of the Dieselgate scandals, which saw Volkswagen and its Audi subsidiary pay billions of dollars in fines for having faked emissions tests. But that could change as the global auto market goes soft. The good times are no longer rolling.

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