Jaguar Owner’s Loss Wider Than All Estimates as Chip Crisis Hits

(Bloomberg) -- Jaguar Land Rover’s Indian owner reported a wider-than-estimated first-quarter loss as a global semiconductor shortage dragged down sales at the British luxury unit.

Tata Motors Ltd. reported a loss of 44.5 billion rupees ($598 million) in the three months ended June 30, compared to a 84.4 billion rupee shortfall a year earlier, the company said Monday. Analysts had forecast a 21 billion rupee loss, according to the average of estimates compiled by Bloomberg.

Jaguar Land Rover, or JLR, reported a revenue of 4.97 billion pounds ($6.9 billion). The company said its commercial vehicle demand was showing a gradual improvement. Raw material costs for Tata Motors jumped to 373.1 billion rupees in the latest quarter compared to 99.4 billion rupees in the same period last year.

“JLR now expects semiconductor supply shortages in the second quarter to be greater than in the first quarter, potentially resulting in wholesale volumes about 50% lower than planned,” Tata Motors said in a statement. “In the second quarter, JLR expects a negative EBIT margin with a free cash outflow of less than £1 billion. JLR expects the situation will start to improve in the second half of the financial year.”

Earlier this month, Jaguar Land Rover warned deliveries in the second quarter will be 50% worse than anticipated as a global chip shortage shows no sign of abating. The chip crisis forced the luxury carmaker to temporarily suspend production at its Castle Bromwich and Halewood plants.

Jaguar Land Rover’s performance is crucial for Mumbai-based conglomerate Tata Group, after a devastating wave of Covid infections and government-imposed lockdowns crimped demand in its home market.

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Jaguar Land Rover is working with suppliers and chip manufacturers to increase the visibility and the control of chip supply for its vehicles, Chief Financial Officer Adrian Mardell said in an investor call earlier this month. It’s also prioritizing production of higher-margin vehicles and looking to change features on vehicles. That said, the automaker isn’t expecting the chip shortage to delay any “significant” launches, Mardell said.

Under CEO Thierry Bollore, the former Renault SA chief who joined the U.K. carmaker in September, Jaguar Land Rover is also planning to electrify its lineup and ditch combustion engines completely in four years, a move that will necessarily mean a higher reliance on more advanced semiconductors. The Land Rover line will get its first fully electric model in 2024, and by the following year, all Jaguars will be entirely powered by batteries.

Tata Motors shares closed 0.8% lower on Monday trading before the earnings were released. The stock is up almost 60% this year.

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