JLR Expects Car Sales to Recover as Chip Crunch Eases

(Bloomberg) -- Jaguar Land Rover said sales are set to rebound as the worst of the protracted semiconductor shortage gripping the industry has passed. 

Production at the British carmaker during the third quarter jumped by more than 40% from the preceding quarter, indicating a recovery in deliveries, P.B. Balaji, chief financial officer of Tata Motors Ltd., Jaguar’s parent, said Monday during an earnings call. 

“We are seeing an easing of pressure on semiconductor supply and production,” Balaji said. “We expect improved production, wholesales in the coming quarter and retails as well. Overall, we expect to see getting back to normalcy in the coming quarter.”

JLR reported a loss of 9 million pounds ($12 million) before tax during the three months through December, compared with a profit of 439 million pounds last year, Tata Motors said. The semiconductor shortage will likely ripple through 2022 and gradually improve, the company said. 

The shortage of chips has hit output across the global car industry, which is also still dealing with fallout from the pandemic. The shortfall is estimated to have resulted in lost production of 7.7 million vehicles last year, according to consulting firm AlixPartners. In addition to supply-chain snags, higher commodity prices are also weighing on automakers. 

JLR is working with first-tier suppliers and chip manufacturers to secure longer-term supplies, Tata said. The unit’s order book had jumped by almost 25% to 155,000 reflecting strong demand for the company’s refreshed Range Rover models. 

Jaguar’s success is crucial for Tata Motors, after the pandemic saw shuttered factories and dealerships last year. The manufacturer expects profits to improve with positive cash flow in the fourth quarter, according to the statement. The luxury unit is also on track to achieve its target of reaching an earnings before interest and taxes margin of 10% or more by the year ending March 31, 2026.

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