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JLR Owner Sees Wider-Than-Expected Loss as Chip Woes Drag On

Published July 27, 2022


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Jaguar Land Rover’s Indian parent posted a higher-than-expected quarterly loss as a prolonged semiconductor shortage was worsened by surging commodity prices and a slow ramp up of its high margin Range Rover model.

Tata Motors Ltd. reported a loss of 50 billion rupees ($625.8 million) for the three months ended June 30, the Mumbai-based carmaker said in an exchange filing Wednesday. That was worse than the average analyst estimate of a 13.05 billion rupees loss, according to data compiled by Bloomberg. 

The group’s revenue came in at 719.3 billion rupees, slightly higher than analyst forecasts. Total costs rose 12% to 777.8 billion rupees.

JLR reported a quarterly loss before tax of £524 million ($632 million), compared with a shortfall of £110 million a year earlier, Tata Motors said. JLR’s quarterly revenue fell 11% from a year earlier, mainly due to a weaker model mix, inflation and adverse currency movements, the company said. 

Automakers globally are struggling to mitigate the impact of semiconductor chip shortages on sales. Earlier on Wednesday, Mercedes-Benz AG flagged concerns about high inflation, supply-chain problems and a worsening energy supply crisis in Europe. 

“Although headwinds from the global semiconductor supply and Covid lockdowns in China have impacted our business performance this quarter, I am pleased to confirm that we have a completely reinforced organization setup to respond to the semiconductor crisis,” Thierry Bollore, JLR’s chief executive officer, said in the statement. 

Tata Motors also said that it was ramping up production of the Range Rover and Range Rover Sport. It continues to target a 5% margin on earnings before interest and taxes and £1 billion in free cash flow in the year through March 2023.

‘Progressively Improve’

“We expect supply side, including that of critical electronic components to progressively improve,” Shailesh Chandra, managing director for Tata Motors’ Passenger Vehicles segment, said in the filing. 

Sales of JLR vehicles slumped 37% to 78,825 units for the June quarter due to chip shortfalls and lockdowns in China, parent Tata Motors said earlier this month. Sales in China slipped by as much as 5%. 

However, demand for JLR vehicles is strong with orders for popular models like the new Range Rover, Range Rover Sport and Defender at 62,000, 20,000 and 46,000 respectively, the company said. 

Tata Motors raised prices by 0.55% across its passenger vehicles earlier this month, following a price hike of 1.5%-2.5% in commercial vehicles in June to combat the “steep” rise in costs.

The views and opinions expressed in this story are those of the authors and do not necessarily reflect the official policy or position of NADA.

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