JLR owner braces for tough ride as chip shortage, pandemic weigh

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  • Expects supply challenges in Q1
  • Overall JLR retail sales up 12.4% in Q4

BENGALURU, May 18 (Reuters) - Tata Motors Ltd (TAMO.NS) warned of a bumpy ride over the next few months as the Indian automaker steers itself through a global chip shortage, rising commodity prices and surging COVID-19 cases in its home market.

The auto industry has been roiled by the chip shortage, triggered by factors including pandemic-induced supply-chain disruptions and consumers splurging on laptops and other electronic devices, forcing companies such as General Motors Co (GM.N) and Ford Motor (F.N) to flag production cuts.

"We expect challenges in supply in the first quarter due to semiconductor shortages," CFO PB Balaji said, adding that the situation should ease in the second quarter and improve thereafter.

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Despite the challenges, Balaji said demand for Jaguar Land Rover (JLR) remains strong, with sales recovering in markets such as China.

JLR suspended operations at two factories in April due to the shortage. read more

The company reported a consolidated net loss of 76.05 billion rupees ($1.04 billion) for the March quarter as it booked a one-time hit of 149.94 billion rupees ($2.05 billion) related to asset write-downs and restructuring costs at JLR, which accounts for most of the Indian automaker's revenue.

The automaker in February announced an electrification strategy for JLR, called Reimagine, under which all Jaguar cars would be fully electric by 2024 and an electric option would be offered across its entire portfolio including Land Rover.

Due to the shift in strategy, the company decided to write down some of the investments it had previously made in its petrol and diesel engine vehicles and platforms, Balaji said in a post earnings call.

"We have decided we will not proceed with some of the investments we have already made halfway," he said.

JLR's unit sales in China jumped 127% from a year earlier, while overall retail sales rose 12.4%.

The brand saved about 300 million pounds ($426 million) in the quarter under its Project Charge, a turnaround plan that was announced in 2018.

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Reporting by Chandini Monnappa in Bengaluru; Editing by Devika Syamnath

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