Chip Shortage A Worry For Jaguar Land Rover

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Sales drop by 5% due to chip shortages; LR Defender best-selling for the quarter

Jaguar Land Rover (JLR) recently reported that in Q2, it registered a 12% increase in retail sales and a 4% rise in wholesales from Q1. But at the same time, the company also indicated that it faced supply-side issues due to semiconductor shortages. Being hopeful for the remaining fiscal, JLR stated, “The company expects free cash flow to be near break-even despite the lower than expected wholesale volumes, based on preliminary cash balances of 3.7 billion. Free cash flow in the second half of the fiscal year is expected to be positive, driven by sequential improvement in wholesale volumes.”.

While Land Rover Defender became the best-selling model with 16,892 units sold in Q2, JLR’s highest-priced model, the new Range Rover large SUV, stood third with 10,717 units sold.

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The quarter ending with September saw 88,121 units of retail sales. While the sales witnessed an uptick in China and North America from the previous quarter, they faced a drop in Europe. Further, JLR sold 75,307 units in the wholesale market this quarter. The company said: “This improvement was lower than planned, primarily due to a lower than expected supply of specialised chips from one supplier, which could not be readily re-sourced in the quarter. This was mitigated partially by further prioritisation of production to the highest margin products, while new agreements with semiconductor suppliers are expected to enable sales improvements in the second half of the fiscal year.”

It must be noted that supply chain issues caused the automaker huge quarterly losses. Its quarterly sales dropped by 5% due to chip supply constraints. Interestingly, China accounted for around 30% (25,518 units) of its total retail sales, making it JLR’s biggest market for this quarter.


 

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