Shortage of semiconductors is expected to spill over to Q2 and impact the quarter’s production of Jaguar Land Rover going against the earlier guidance given by it of improvement in the availability of the chips.
“The automotive industry has been experiencing a global shortage in the supply of semiconductors, primarily as a result of disruption to production from Covid-19. Although this did not have a material impact on our production and sales in FY21, the ongoing supply disruption, impacting most industries, is having an impact on our production in Q1 and is expected to continue into Q2,” Jaguar Land Rover stated in its FY21 annual report.
The two British luxury automotive brands lost about 7,000 units of production to the semiconductor shortage during the March quarter. In April it suspended production at two of its factories in the UK for a ‘limited period’ due to non-availability of the computer chips even as the order backlog climbed to 100,000 units and a waiting period that has hit 12 months.
“We are monitoring the situation closely and working with our suppliers to minimise the impact of the disruption and intend to catch back as much lost production as possible when supply capacity improves in the second half of FY22,” JLR stated further.
After announcing the March quarter results in May, Tata Motors chief financial officer P B Balaji had given guidance of easing the semiconductor shortage issue from the July-September quarter.
Speaking to CNBC TV18 Balaji had said, “In Q1, we do see some of the stress building up. We think Q2 onwards gradually things should improve and I am hoping that the semiconductor issue should be broadly behind us, at least it should be significantly lower in terms of impact.”
During Q4 FY21 JLR recorded wholesale volumes of 136,461 units. While this was a growth of 7 percent compared to Q4 FY20 it was 25 percent less than its all-time best quarterly wholesale of 182,757 units recorded in Q4 FY18.
As far as Tata Motors’ India business is concerned production of its passenger vehicles have not been impacted unlike JLR or rivals like Mahindra & Mahindra (M&M) who had to suspend production due to such shortages. However, the company acknowledged that the supply of such chips had deteriorated in Q1 when compared to Q4FY21.
Bosch, a global supplier of semiconductors to automotive companies, has warned that the supply crunch of these chips could last for the entire period of 2021. The German engineering company is the exclusive supplier of semiconductors to M&M who depend on these chips for producing models like the Thar.