Jaguar Land Rover is to cut more than 1,000 UK agency staff after losing £500m in three months due to the coronavirus pandemic. The UK’s largest automotive company was on course to return to profit after last year’s record £3.6bn loss until the crisis took hold, wiping out its 2020 earnings in a matter of weeks. The carmaker is now preparing to slash more than 1,000 contractors, potentially affecting factories at Halewood on Merseyside and Solihull and Castle Bromwich in the West Midlands. The decision came after JLR reported a loss of £501m before tax in its final quarter to the end of March, dragging it £422m into the red for the year as a whole. Quarterly sales figures indicated the severity of the impact of the pandemic on global sales. JLR sold 509,000 cars during the year, 70,000 fewer than it did the year before. Of the shortfall, 49,000 came in the fourth quarter as Covid-19 hit China, one of JLR’s most important markets, before spreading throughout the world. The result was that annual revenues came in £1.2bn lower at just under £23bn, with the fourth-quarter decline of £1.7bn reversing an improved performance in the first nine months. JLR, owned by the Indian company Tata Motors, was already retrenching in the face of slumping sales of diesel vehicles and its own over-reliance on a Chinese market that had been sluggish even before the Covid-19 outbreak. It announced plans to shed 5,000 jobs last year after its record loss and set a cost-cutting target of £1bn by 2021. In the light of Covid-19, it said on Monday that another 1,100 contract workers at its manufacturing plants would go and increased its savings goal to £5bn. “Through its ongoing transformation programme, Jaguar Land Rover is taking action to optimise performance and achieve further operational efficiencies to enable sustainable growth and safeguard the long-term success of our business,” the company said in a statement. “Against the backdrop of the Covid-19 pandemic, the company has taken the difficult decision to reduce the number of contract-agency employees in its manufacturing plants over the coming months.” Des Quinn, national officer for trade union Unite, said: “It is another devastating blow for our auto sector and the communities that rely on them for jobs. “We urge the government to get on with delivering the urgently needed sector support package, as other countries such as France and Germany have done, so that we can stem the tide of redundancies.” But the company’s chief executive, Professor Sir Ralf Speth, said there was some cause for optimism in a nascent recovery in sales seen in China, as customers returned to showrooms. “Our operational fitness gives me confidence that we can weather this storm,” he said. JLR said it was planning for a “gradual recovery” and pointed to spring sales in China, which were down a mere 3% in April and 4% up on last year’s May performance, with sales of Range Rovers particularly encouraging. The company borrowed 5bn yuan (£560m) from five Chinese banks this month after failing to qualify for loans from the Treasury and Bank of England because of its “junk” investment rating. After shutting down its car plants worldwide, it has resumed production at sites including Halewood and Solihull, although Castle Bromwich remains closed.