Tata Motors-owned Jaguar Land Rover (JLR) may be sitting on a record order bank that covers volumes for two quarters; the company believes the scarcity in chip supply has only made the two British brands more desirable.

JLR is asking customers to wait for six months to one year to get their vehicles delivered as each of its factories continue their struggle to get semiconductors due to a global shortage. The loss of production has even resulted in a loss of market share for JLR, but the company holds that the wait for the car has made the brand even more desirable. The new Range Rover makes up more than a quarter of the overall bookings of JLR while the new Range Rover Sport gets readied to go on sale in Q2.

Backlog increases

In a post earnings conference call, Thierry Bolore, Chief Executive Officer, Jaguar Land Rover, said, “Yes, we are losing some market share. At the same time, the scarcity is creating higher desirability for the brands and it is incredible.” 

While there was a gradual improvement in chip supply at JLR during the March quarter, the two brands claim to have a total backlog of 1,68,000 units, up from 1,55,000 recorded in the December quarter. As against demand, the company was able to supply just under 83,000 units during the March quarter.

“We are surprised of the incredible customer appetite for our products but we cannot supply enough. So, to that extent, the brand is getting the boost towards modern luxury at a higher level than we expected, and faster,” Bolore added.

Mitigating pressures

Number of cars dispatched by JLR during the March quarter at around 77,000 units was 37 per cent less than 1,23,000 clocked in the same quarter of FY21, as per data shared by Tata Motors. The Russia-Ukraine war and lockdown in China due to Covid-19 is expected to maintain the pressure on supply chain, especially semiconductors. JLR has a small number of parts which are sourced from Ukraine directly or indirectly through its supply base. Tata Motors admits that the chip shortages have affected JLR more than its competition. 

“It is clear that we are impacted more than some of our competition and we are mitigating that with an array of actions, especially through some long-term strategic agreements which are helping to ensure we have much better allocations,” Bolore added.

Wider supply chain pressures in China are expected to limit improvement in Q1 FY23. There are ongoing strategic discussions with semiconductor suppliers to secure long-term supply agreements for future product programmes to minimise future supply risks, Tata Motors highlighted.

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