JLR second quarter sales increase, but microchip problems remain

Jaguar Land Rover has seen retail and wholesale volumes rise during the second quarter of fiscal year 2023, but is still being impacted by a shortage of microchips which is hitting production.

Wholesale sales are the finished cars JLR sells as a business, while retails are vehicles customers buy from retailers.

The luxury car maker, which has production plants at Halewood in Merseyside and Solihull and Castle Bromwich in the West Midlands, issued figures for the three months to September 30, 2022.

They showed retail sales for the quarter were 88,121 vehicles, an increase of 9,296 compared with the previous quarter ending 30 June 2022.

Compared with the first quarter, retail sales were higher in China (+38%), North America (+27%) and Overseas (+14%) but were lower in UK (minus seven per cent) and Europe (-10%).

Wholesale volumes were 75,307 units in the period, excluding the group’s China joint venture, up four per cent compared to the previous quarter ending June 30, 2022. 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.

The production ramp up of New Range Rover and New Range Rover Sport improved with 13,537 units wholesaled in the quarter, up from 5,790 in the first quarter. This is expected to continue improve in the second half.

The company continues to see strong demand for its products, with global retail orders again setting new records in the quarter.

As at September 30, 2022, the total order book has grown to 205,000 units, up around 5,000 orders from June 30, 2022. Demand for the New Range Rover, New Range Rover Sport and Defender remain strong, accounting for more than 145,000 of the 205,000 orders.

Jaguar Land Rover said it expects to report unaudited results for the three months ending September 30, 2022, in the first half of November.

The company expects free cashflow to be near break-even, despite the lower than expected wholesale volumes, based on preliminary cash balances of £3.7bn. Free cashflow in the second half of the fiscal year is expected to be positive, driven by sequential improvement in wholesale volumes.