A global shortage of computer chips could hit sales at carmaker Jaguar Land Rover by up to 50% in the next few months. Tony McDonough reports
A global shortage of computer chips could see Jaguar Land Rover (JLR) sales fall by up to 50% in the next few months, the company said on Wednesday.
Despite seeing its recovery from the effects of the COVID-19 pandemic gather pace, the business, which employs around 3,700 people at its factory at Halewood in Merseyside, saw its shares fall 9% in early trading on the latest update.
In April, LBN reported the factory, which assembles the Range Rover, Evoque and the Land Rover Discovery Sport models, had temporarily suspended production due to the chip shortage.
The worldwide shortage of computer chips is causing production problems across multiple business sectors, particularly automotive. Lockdowns and the increased use of technology during the COVID-19 pandemic has led to a surge in demand for semiconductor chips.
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Thierry Bolloré, JLR’s chief executive, said: “Looking ahead, the chip shortage is presently very dynamic and difficult to forecast.
“Based on recent input from suppliers, we now expect chip supply shortages in the second quarter ended September 30, 2021, to be greater than in the first quarter, potentially resulting in wholesale volumes about 50% lower than planned, although we are continuing to work to mitigate this.
“We expect the situation will start to improve in the second half of our financial year. However, the broader underlying structural capacity issues will only be resolved as supplier investment in new capacities comes online over the next 12-18 months and so we expect some level of shortages will continue through to the end of the year and beyond.
“While the present supply constraints continue, the company will continue to prioritise production of higher margin vehicles for the chip supply available as well as make chip and product specification changes where possible to reduce the impact.”
JLR retail sales for the three-month period to June 30 were significantly up year-on-year, reflecting the continuing recovery in demand from the COVID-19 pandemic, particularly compared to a year ago.
Retail sales for the quarter, the first of its fiscal year, were 124,537 vehicles, 68.1% higher than the 74,067 vehicles sold in the same period in 2020. Retails were higher year-on-year in every key region including in the UK (+186.9%), Europe (+124%), Overseas (+71%), North America (+50.5%) and China (+14%).
Retail sales of all models, other than Jaguar XE, were higher year-on-year and sales of the new Land Rover Defender continued to climb with 17,194 vehicles retailed in the first quarter.
In its trading. Update, JLR said: “While the present semiconductor supply shortages continue to be a challenge for the industry, we are encouraged by the strong demand we see for our vehicles.”