Jaguar Land Rover expects semiconductor crisis to improve in second half of FY22
British automaker Jaguar Land Rover (JLR) expects that the ongoing global semiconductor shortage situation will gradually start getting better during the second half of the current financial year. In the meantime, the Tata Motors-owned company will continue taking steps to contain the impact of the shortage on its operations.
While the supply constrains remain, the company will continue taking mitigating actions such as prioritising the production of higher-margin vehicles and closely managing costs. "Looking ahead, the supply shortage of semiconductors remains dynamic and difficult to forecast. However, JLR expects to see a gradual recovery starting in the second half of Fiscal 2022," the automaker said in its interim report.
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Jaguar Land Rover is also taking measures to increase its future visibility and control over semiconductor supply for its vehicles by working closely with its suppliers," the company mentioned. It also noted in the report that it continues to recover from the pandemic but recent outbreaks in a number of regions in Southeast Asia have impacted the supply base.
In its interim report, the automaker also mentioned that the passenger car industry volumes continue to be constrained in most markets due to the supply shortage of semiconductors. However, it added that demand continues to be strong for its products with record orders in excess of 1,25,000 units. It hopes that this should support a strong recovery.
Jaguar Land Rover expects its EBIT (earnings before interest and tax) margin and free cash flow (before restructuring costs) to turn positive in the second half of the financial year. In Q2 FY22, the company's total retail sales stood at 92,710 units, down 18.4 per cent year-on-year as a result of the semiconductor shortage. Its retail sales too were lower year-on-year in most regions, including North America, China, Europe, and the UK.
It further noted that the retail sales of all its models were lower year-on-year except for the new Land Rover Defender, which retailed 16,725 vehicles, making it its best-selling model in the quarter.
(With inputs from PTI)