The JLR cyber attack: Motor industry supply chains and beyond

In summary

• The recent cyber-attack on Jaguar Land Rover contributed to yesterday’s lower than expected GDP figures and saw the plight of its supply chain also become headline news 
• Original equipment manufacturers (OEMs) in the motor sector traditionally have highly efficient just-in-time supply chains that often include smaller suppliers in tiers 2 and 3, producing lower value and specialist components to precise specifications under strict quality control requirements 
• Many of those subcontractors do not serve a single OEM, and their customer base may be wider than the automotive sector 
• If you are outside the motor sector but your suppliers have significant exposure to JLR or the wider automotive industry, now is the time to consider your supply chain security and risk mitigation against supplier failure 

The European car market remains smaller in terms of unit sales than it was before Covid and faces increased competition from China, especially in electric vehicles.  

According to ACEA’s latest report, while Global production increased 3.5% in the first half of 2025, European vehicle production shrank by 2.6%. European production also faces uncertainty over the impact of US tariffs.  

The market is not simply made up of main vehicle manufacturers, however. It also relies on various tiers of subcontract manufacturers.     

While some tier 2 and 3 suppliers focus primarily on automotive supplies, the qualities that bring suppliers success when manufacturing automotive parts also make them attractive to other sectors with similar quality control and process-led production, such as aerospace and defence. 

A failure of a supplier to an automotive OEM can therefore have impacts far beyond that industry.   

Tier 2 and tier 3 subcontractors to the automotive industry face several threats: 

• Potential for over-reliance on a single or small number of OEMs as the ultimate customer, and a lack of diversification 
• General macro-economic factors affecting production costs and margins  
• Reduced demand driven by wider market factors and falling sales of UK and EU assembled vehicles 
• Reductions in spare parts holdings by OEMs for the aftersales market 

In favourable times, sole sourcing of components can provide cost and administrative benefits to the OEM and upper tier suppliers.  This is particularly true where either a qualified process or procedure is needed in manufacturing or specialist tooling.   

This strategy comes with significant downsides, however, in the event of distress or an insolvency event at that supplier. Shortages of just a single key raw material or component can stop a whole production line, causing substantial losses to the OEM and contagion from the shutdown to the rest of the supply chain. Tier 1 suppliers may be financially accountable for failures in tiers 2 and 3.   

While this was not the cause of the crisis around JLR, that situation powerfully demonstrates the impact of mass line closures. Lead times to change suppliers and recommence production can stretch into many months due to onboarding, tooling and procurement needs. For the OEM, this means lost sales and reputational damage.   

Even where there is not a sole source, other suppliers may not be able to pick up the shortfall sufficiently quickly if another tier 2 or 3 supplier fails. Scaling up production, existing committed orders and working capital may all present issues for smaller suppliers in filling a void.  

Much of the recent media attention has focused on the impact on production, with the slowdown caused by the attack contributing to yesterday’s lower than expected GDP figures. However, supply chain failures also impact aftersales and potentially brand confidence.    

Parts shortages for relatively basic repairs have been widely reported over the last year, as OEMs struggle to hold the volume and variety of parts that heavily diversified ranges with long options lists require.   

Aftersales (warranties and servicing) is a critical revenue source for franchised dealers and independent operators, and long waits on warranty parts are likely to damage the OEM’s reputation.   

Outside the automotive sector, meanwhile, if your supply chain includes automotive component suppliers, you need to consider your vulnerability to a failure in that supply chain. Even a failure involving trading on or a business sale is likely to be disruptive to supplies.