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Jaguar Land Rover cuts output due to chip shortage

The shutdowns may result in a volume loss of between 5,000 and 7,000

October 26, 2021 / 02:32 PM IST
 
 
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Production cutbacks due to semiconductor shortages have continued for Jaguar Land Rover in the third quarter of FY22 with temporary shutdowns of three of its plants in October.


The two Tata Motors-owned brands have resorted to production shutdowns at its plants in Nitra (Slovakia) and Solihull (the UK) between October 25 and 29, while the plant in Graz (Austria), which is owned by its partner Magna Steyr, will witness no-production days on October 25 and 26, and November 1 and 2, people familiar with the development told The Economic Times.


The shutdowns may result in a volume loss of between 5,000 and 7,000 units and an incremental revenue loss of £300-325 million, or about Rs 3,100-3,350 crore, sources added to ET.


Including volumes of its China joint venture, CJLR, Jaguar Land Rover clocked wholesale volumes of 97,141 units during the April-June quarter, as per its own data. While the two brands have not shared the numbers for the July-September quarter, wholesale volumes excluding CJLR stood at 64,032 units.


The two luxury brands are estimated to have lost a total of 55,000-60,000 units in wholesale volumes in the April-September period. While JLR has not provided any sales volume guidance for FY22, analysts are expecting sales of around 375,000 for the year.

The Halewood factory in the UK was kept shut for a week due to the chip shortage. The plant makes Land Rover Discovery Sport and Range Rover Evoque models. JLR is giving priority to high-margin products like the Range Rover and Range Rover Sport amid the shortages.

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Tata Motors depends on JLR for profit generation. Any loss of business at the two brands hits the Mumbai-based company severely. "We expect JLR to post revenues of ~GBP3.6bn (down ~18% YoY) with adjusted EBITDA margin of ~5.9% (down 511bps YoY). On reported basis, we expect JLR to report PAT loss of ~GBP218mn," said a report by ICICI Securities.

JLR claims to be sitting on retail orders of more than 125,000 units. “The chip shortage remains dynamic and difficult to forecast; however, the company expects semiconductor shortages to gradually ease over about the next 12 months from here,” JLR had said in an October 8 release.

Moneycontrol News
first published: Oct 26, 2021 02:32 pm

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