Jaguar Land Rover reported that it reduced its vehicle sales due to the shortage of semiconductor chips in the fiscal year ended March 31, 2022.

For one thing, wholesale sales (excluding its China joint venture) for fiscal year 2022 were 294,182, down 15.4% year-on-year.

This reduction was seen across all markets as Jaguar Land Rover felt the impact of supply and semiconductor constraints on production, limiting product availability to its customers.

Given these availability constraints, the company has been able to increase its revenue per unit, reflecting the prioritization of higher margin products, giving us a strong mix, particularly in the Range Rover and Defender families.

On the other hand, retail sales for fiscal year 2022 were 376,381, this is 14.4% less than in fiscal year 2021.

But demand remains strong with the order book growing to a new record of 168,471 units as of March 31, 2022. Orders for the new Range Rover have risen to 45,584, while demand for the Defender remains strong at 40,618 orders.

Jaguar Land Rover

Some parts of the automotive supply chain come from Russia and Ukraine, including neon gas used in semiconductor production (Ukraine) and palladium (Russia).

If the conflict leads to shortages of these or any other products, the company believes that it may face challenges within its supply chain in sourcing parts or face significant price increases in the future.

Semiconductor chips are an important component of the electrical architecture of our vehicles.

In recent years, automotive companies have experienced limited access to semiconductor supplies, which has affected production schedules.

A limited number of companies produce the majority of the semiconductors manufactured globally, and the reduced capacity of these companies due to, among other things, government actions in relation to the Covid-19 pandemic, has contributed to a persistent shortage of semiconductors for the global automotive industry.

Semiconductor supply was also affected during 2021 by disruptions caused by a fire at the Renesas chip plant in Japan and extreme weather conditions in Texas during the winter of 2021.

Additionally, pandemic-induced shutdowns required work-from-home, and in general, post-pandemic there has been an unprecedented surge in demand for home appliances, especially consumer electronics, further accentuated by the migration to 5G, which which has led to a shift in the allocation of capacity from the automotive sector to consumer durables.