Tata Motors has reported a decline of more than 6 percent in its share price in the last hour of trade as the company flagged chip supply shortage.
Shortage of semiconductors may see Jaguar Land Rover report 50 percent lower wholesale volumes by the end of the September 2021 quarter coupled with a negative EBIT margin, Tata Motors, the owner of the two British brands, warned.
“Looking ahead, the chip shortage is presently very dynamic and difficult to forecast. Based on recent input from suppliers, we now expect chip supply shortages in the second quarter ended September 30, 2021, to be greater than in the first quarter, potentially resulting in wholesale volumes about 50 percent lower than planned, although we are continuing to work to mitigate this,” the Auto Firm said in a BSE filing.
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.
While the present supply constraints continue, the Company will continue to prioritize production of higher-margin vehicles for the chip supply available as well as make chip and product specification changes where possible to reduce the impact, it said.
Jaguar Land Rover retail sales for the three months to June 30, 2021, were significantly up YoY, reflecting the continuing recovery in demand from the Covid 19 pandemic, particularly compared to a year ago.