“Scarcity of semiconductor supply makes JLR cars more desirable”

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Jaguar Land Rover (JLR), owned by Tata Motors, could be sitting on a record order bank that covers volumes for two quarters; the company believes that the scarcity of chip supply has only made the two British brands more desirable.

JLR is asking customers to wait six months to a year for their vehicles to be delivered as each of its factories continues its struggle to obtain semiconductors due to a global shortage. The loss of production has even resulted in a loss of market share for JLR, but the company believes that the wait for the car has made the brand even more desirable. The new Range Rover accounts for more than a quarter of JLR’s overall bookings while the new Range Rover Sport prepares to go on sale in the second quarter.

The backlog is growing

In a post-earnings conference call, Thierry Boloré, CEO of Jaguar Land Rover, said: “Yes, we are losing market share. At the same time, scarcity creates greater desirability for brands and that’s amazing.

Although there was a gradual improvement in chip supply at JLR during the March quarter, the two brands say they have a total backlog of 1,68,000 units, compared to 1,55,000 recorded in the December quarter. . Relative to demand, the company was able to supply just under 83,000 units in the March quarter.

“We’re surprised at the incredible appetite customers have for our products, but we can’t supply enough of them. So to that extent the brand is getting a push towards modern luxury at a higher level than expected and faster,” Boloré added.

Pressure alleviation

The number of cars shipped by JLR in the March quarter at around 77,000 units was 37% lower than the 1.23,000 recorded in the same quarter of FY21, according to data shared by Tata Motors. The Russian-Ukrainian war and the Covid-19 lockdown in China are expected to keep pressure on the supply chain, especially semiconductors. JLR has a small number of parts sourced from Ukraine either directly or indirectly through its supply base. Tata Motors admits chip shortages have affected JLR more than competitors.

“It is clear that we are more affected than some of our competitors and we are mitigating this with a series of actions, in particular through long-term strategic agreements which help to ensure that we have much better allocations,” added Bolore.

Increased supply chain pressures in China are expected to limit improvement in the first quarter of FY23. Strategic discussions are underway with semiconductor vendors to secure long-term supply agreements for future product programs to minimize future supply risks, Tata Motors said.

Published on

May 15, 2022

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