British luxury car maker Jaguar Land Rover warned a global semiconductor shortage is worsening and deliveries in the second quarter will be 50% worse than initially thought. Shares of its Indian parent, Tata Motors, slumped in Mumbai.
Jaguar Land Rover joins China’s biggest car maker in cutting vehicle output as a result of the crisis. SAIC Motor trimmed its wholesale target by about 500 000 cars in the first half. Other automakers including Nissan, Hyundai and Volkswagen have warned that shrinking inventory due to the semiconductor dearth will keep squeezing sales this northern hemisphere summer.
A shortage of automotive chips that began in December as consumer demand for personal devices soared amid pandemic lockdowns has persisted into 2021, with a factory fire at a major manufacturer in Japan and frigid weather in the US exacerbating the crisis. The dearth is threatening to slash US$110-billion in sales from the car industry, consulting firm AlixPartners forecast in May, and has forced manufacturers to overhaul the way they get the electronic components that have become critical to contemporary vehicle design.
“The chip shortage is presently very dynamic and difficult to forecast,” Jaguar Land Rover said in a statement that was filed to Indian stock exchanges by Tata Motors on Tuesday. “The broader underlying structural capacity issues will only be resolved as supplier investment in new capacities comes online over the next 12-18 months, and so we expect some level of shortages will continue through to the end of the year and beyond.”
Stock in Tata Motors fell by 10% in early trade on Tuesday. — Reported by Anurag Kotoky, (c) 2021 Bloomberg LP