Chip supply issue hits JLR sales, but luxury car maker boasts record order book
Luxury car maker Jaguar Land Rover (JLR) revealed that retail sales for the three-month period to September 30, 2021, continued to be hampered by the impact of the global semiconductor shortage on production, with wholesales for the period in line with July guidance.
However, underlying demand for Jaguar Land Rover products remains strong with order books at record levels.
The group, which has manufacturing sites at Halewood on Merseyside, and Solihull and Castle Bromwich in the West Midlands, today released sales figures for the second quarter period. Next month the group will update markets with its financial performance for the same period.
Today’s announcement showed that retail sales for the second quarter period were 92,710 vehicles, 18.4% lower than the 113,569 vehicles sold in the same quarter last year.
Retails were lower year-on year in most regions, including North America (-15.6%), China (-6.3%), Europe (-17.0%), and in the UK (-47.6%), but were up in the overseas region (+10.0%).
Retail sales of all models were lower year-on-year with the exception of the new Land Rover Defender, which retailed 16,725 vehicles, up 70.4% year-on-year, making it the group’s best selling model in the quarter.
In line with July guidance, second quarter wholesales totaled 64,032 units, excluding the China joint venture, down 12.8% year-on year.
As with retails, wholesales were lower year-on-year in all regions apart from the overseas region (+40.5%) and for most models, except the new Land Rover Defender up 18.0% on 14,305 wholesales.
Despite the impact of the semiconductor shortage on production and sales, the company continues to see strong demand for its products with global retail orders at record levels, in excess of 125,000 vehicles.
JLR said the global semiconductor supply issue represents a significant near term challenge for the industry which will take time to work through.
However, it added that is is encouraging it is still able to grow sales of the Land Rover Defender in the second quarter.
Moreover, JLR said it is delighted to have a record company order book demonstrating the underlying demand for its products which it will satisfy when the semiconductor supply recovers.
Chief commercial officer, Lennard Hoornik, said: “At the start of November, Jaguar Land Rover expects to report unaudited results for the three months ending 30 September 2021.
“At the end of the period, the company had about £3.8bn of cash and short term investments (unaudited), after the issuance of a $500m eight year 5.500% and €500m seven year 4.5% bond in July.
“Despite the continuing semiconductor supply constraints, Jaguar Land Rover expects to report a free cash outflow of under £0.7bn for the quarter, significantly better than the £1bn outflow initially anticipated.
“Total liquidity at the end of the second quarter is expected of about £5.9bn, including a £2.0bn undrawn committed revolving credit facility.
“Looking ahead, the chip shortage remains dynamic and difficult to forecast, however, the company expects semiconductor shortages to gradually ease over about the next 12 months from here.”