Losses at Jaguar Land Rover deepened in the three months to September after chip shortages cost the Range Rover owner tens of thousands of lost vehicles and hit its efforts to lower emissions from its fleet.
The group, owned by Tata Motors, posted a pre-tax loss of £302 million for the quarter, compared with a profit of £65 million in the same period a year earlier, and deeper than the £110 million loss it reported in the quarter to June.
Revenues fell 11 per cent to £3.9 billion, after sales of every model other than the Land Rover Defender dropped. Every big region saw fewer sales, with the UK market down by half.
The number of retail sales fell to 92,000, from 114,000 a year earlier, and the group said it had outstanding orders for 125,000 vehicles.
Carmakers across the world have been hit by semiconductor shortages, forcing them to close factories and holding back the recovery many were banking on coming out of the pandemic.
Electric vehicles
The shortages also played havoc with Jaguar Land Rover's plans to increase sales of electric and plug-in hybrid models, which it needs to sell to meet emissions rules in Europe, the US and China.
The group said chip shortages “disproportionately impacted production of electrified products”.
Jaguar Land Rover will pay £37 million to Tesla for an arrangement that allows it to pool its UK and EU carbon emissions with the electric car maker, bringing down its average and helping it stay within legal limits. This will allow it to avoid a fine that the company disclosed on Monday would have been about £89 million.
The company expected to spend £59 million buying emissions credits from rivals in China and the US to help it meet targets in those markets, it added.
While the company said that two-thirds of its vehicles sold in the quarter were battery- or hybrid-powered, the vast majority were only “mild hybrid”, a system that still relies on a combustion engine for driving the vehicle.
Just 3 per cent of sales were its pure battery Jaguar I-Pace, while sales of plug-in hybrid cars that can drive using battery power were 8 per cent.
The company has been slower than rivals to roll out electric models. Last week it previewed a fully electric Range Rover that is due out in 2024, while chief executive Thierry Bolloré previously told the Financial Times it will launch a battery-powered version of the Defender.
"The global shortage of semiconductors continued to constrain our production, sales and financial performance in the quarter but we're encouraged to see the continuing strong demand for our products with order books at new record levels," said finance chief Adrian Mardell.
The carmaker expects its free cash flow and operating margin - which were both negative in the quarter - to turn positive in the coming six months as the squeeze on chip supplies eases. – Copyright The Financial Times Limited 2021
