Shares of Tata Motors closed at Rs 316 per piece, down more than 10 per cent in intra-day trade on BSE, down 8.4 per cent from the previous close.
Jaguar Land Rover
Tata Motors’ Jaguar Land Rover (JLR) on Tuesday said a shortfall in chip supply will result in a 50 per cent reduction in its wholesale business during the second quarter ended September 30. This is the reason why the shares of Tata Motors are seeing a huge decline.
JLR said in a press statement, “Chip shortage is currently acute and it is difficult to predict. Based on recent inputs from suppliers, we expect chip supply shortfalls in the second quarter ending September 30 to be greater than in the first quarter, potentially resulting in approximately 50 percent lower than the bulk quantity plan However, we are continuing to work to reduce it.
Tata Motors shares fall more than 10 percent
Shares of Tata Motors closed more than 10 per cent lower at Rs 316 per piece on the BSE intra-day, down 8.4 per cent from the previous close. Jaguar Land Rover’s retail sales have grown significantly year-on-year from the three-month period to June 30, reflecting a steady improvement in demand. However, wholesale sales, in particular, were lower than demand due to semiconductor supply issues affecting the global auto industry.
Thierry Bollore, Chief Executive Officer, Jaguar Land Rover, said, “Current semiconductor supply issues add to the challenges for the industry, which will take time to work through, but when supply recovers, we will have much more demand. We are taking strong steps to ensure the security of our supply chains for the foreseeable future, working directly with suppliers and chip manufacturers to increase visibility and control over chip supplies for our vehicles.
Increase in retail sales last year
Retail sales for the first quarter were 69 per cent higher than the vehicles sold in Q1 last year, rising from 74,067 in Q1 last year to 1,24,537 vehicles sold in the first quarter of FY 2022. Retail sales were higher year-on-year in every major region, including the UK, which saw a growth of 187 percent. Europe saw an overall increase of 124 percent, overseas sales increased by 71 percent, North America grew 50 percent, and China saw a 14 percent increase in retail sales.
While wholesales grew 72 per cent year-on-year, it was still 30,000 less than planned due to semiconductor supply constraints and the impact of Covid.
Possibility of improvement in the second quarter
According to JLR, the situation may start improving in the second half of the financial year. However, the broad underlying structural capability issues will be addressed only when supplier investments in new capacities go online over the next 12-18 months. So the supply shortfall is expected to happen next year and beyond.
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