Jaguar Land Rover has avoided global chip shortage, CEO says

LONDON -- Jaguar Land Rover production has not yet been hit by the global shortage of semiconductors after it negotiated directly with suppliers, CEO Thierry Bollore said.

Automakers, who are slowly ramping up production after coronavirus lockdowns, have seen their output affected by a shortage in chips as suppliers shifted their focus towards industries that have not been hit as hard by COVID-19, such as makers of smartphones and gaming devices.

"We are not impacted at the moment, because the team is getting in touch with Tier 2, 3 and 4 suppliers to make sure that the allocations are positive," Bollore said on an investor call on Friday.

Microchip suppliers agreed not to cut deliveries to JLR's suppliers because of the company's relatively small size, Bollore said. "We are so small compared to other actors that in fact our allocation doesn't change the picture for the other customers," he said.

Nissan said last month that its microchip supply was so far unaffected at its Sunderland plant in England.

"If I am a manufacturer where I have just have 10 percent for automotive and 90 percent for non-automotive, and 90 percent is increasing and 10 percent reducing, obviously I will allocate capacity to the 90 percent," Ashwani Gupta, Nissan's chief operating officer, told UK journalists on Jan. 21.

Automakers hit by chip shortages in Europe include Volkswagen, which said it has applied for government aid for short-time work at its Wolfsburg, Germany, plant in February. Daimler has applied for short-time work for its Bremen and Rastatt sites in Germany, while production at its plant in Kecskemet, Hungary, will be halted from Jan. 20 to Jan. 30 due to the shortage.

Newer cars, especially electrified versions, need more chips than older models, further squeezing supply.

Gupta said the new Nissan Qashqai compact SUV, which will be revealed this year, will have 50 percent more sensors than the outgoing model, while the new Rogue, which will be sold in Europe as the X-trail, has 70 percent more due to increased number of automated driving assist features on both models.

Gupta said predicted supply problems would continue until May.

Automakers in Europe are also having to ensure workers are protected from outbreaks of COVID-19 to avoid further disruption to production.

JLR chief financial officer Adrian Mardell said on the Jan. 29 investor call he believed the company was "the biggest tester for COVID-19 in the UK."

The company uses quick-result lateral flow tests on its workers as part of a pilot program run by the country's National Health Service.

"We have seen an increase in positive cases and self-isolations among our employees reflecting the overall rise in the community since the Christmas period," JLR said in a statement.

JLR's is offering tests at its UK plants to "anyone identified as a close contact of someone who tests positive for COVID-19," the automaker said. "If an employee does not want to take part in the pilot, they will self-isolate at home for 10 days in line with the UK Government advice."