Shortage of semiconductors has crippled sales volumes of British luxury brand Jaguar Land Rover, impacting margins of parent Tata Motors in the December, 2021 quarter.

Mumbai-based Tata Motors recorded a net loss of ₹1,338.17 crore at a consolidated level during the reporting quarter as against ₹3,222.21 crore net profit posted in the same quarter last year.

Retail sales of Jaguar Land Rover vehicles dropped nearly 38 per cent during the December 2021 quarter to 80,126 units as against the same quarter last year.

The fall was contained to a certain extent by the strong performance by the stand-alone business where Tata Motors scaled new market-share peak in the passenger vehicle segment, as well as by the company’s policy of giving preference to production of high margin products of JLR.

The company’s total income at the consolidated level stood at ₹72,931.86 crore during the reporting quarter, a fall of 4.49 per cent compared with ₹76,365.79 crore posted in the corresponding quarter last year.

EBITDA margin fell 460 basis points to 10.2 per cent at the consolidated level during the quarter. JLR’s EBITDA fell 380 bps to 12 per cent, while that of Tata Motors fell 350 bps to 3.3 per cent.

While the chip supply issue is expected to remain an area of concern for JLR, Tata Motors claimed that JLR has an order book of 1,55,000 units including 30,000 of the new Range Rover which is yet to make its commercial debut in the world market.

Shortage through 2022

“The semiconductor shortage is expected to continue through 2022 but is expected to gradually improve as capacity within the supply base increases. The company is also engaging with first-tier suppliers and directly with the chip manufacturers to secure supply longer-term,” Tata Motors said in a statement.

Thierry Bolloré, Jaguar Land Rover’s Chief Executive Officer, said, “Whilst semiconductor supplies have continued to constrain sales this quarter, we continue to see very strong demand for our products. The global order book is at record levels and a booking order for 30,000 units for the new Range Rover before deliveries even start this quarter.”

At the stand-alone level Tata Motors recorded a net profit of ₹175.85 crore for the quarter ended December, 2021, as against a net loss of ₹638.04 crore recorded in the same quarter last year. Total stand-alone income grew 28 per cent to ₹12,491.52 crore during the reporting quarter as compared to ₹9,722.53 crore posted in the same quarter last year.

Sale volume of Tata Motors’ commercial and passenger vehicles which make up the stand-alone business, increased 30.4 per cent to 2,00,212 units, including exports. Electric vehicle sales stood at 5,592 units during the quarter, clocking a 345 per cent growth compared with same quarter last year.

“The demand situation continues to remain strong despite near term concerns from Omicron spread. Supply situation is gradually improving. Sharp commodity inflation continues to remain a challenge. Sequential improvement in overall performance is expected to continue in Q4 FY22 and beyond, and we target to be EBIT and free cash flow positive in Q4 FY22,” Tata Motors added in the statement.