Jaguar Land Rover customers face delivery waiting times of more than a year due to stalling production of vehicles as a result of the ongoing semiconductor chip shortage, according to reports.
The UK car maker has informed leasing companies that there will be long lead times on over 50 different variants of its existing range, meaning deliveries of company car vehicles could take in excess of 12 months to arrive.
It comes after the brand was forced to pause production of motors at its Halewood and Castle Bromwich factories in the UK, as well as the Nitra Plant in Slovakia where the new Defender 4X4 is manufactured.
Year-long wait for some Jaguar Land Rover models: Some 53 variants of the brand’s vehicles are currently subject to lead times of 12 months or more, according to fresh reports
According to a briefing note sent to leasing firms seen by Liverpool Business News, JLR said it was still taking quotations and orders but warned that supplying retailers should be told they will not be in a position to take deliveries due to ‘extended lead times’.
The delays are currently impacting 53 different versions of its cars, including the popular Land Rover Discovery Sport and Range Rover Evoque, which are both produced at the Halewood site in Merseyside.
Other motors with extended waiting times include the Jaguar E-Pace and Land Rover Discovery SUVs as well as the in-demand Defender 4X4, which has been on the market for just a year.
In a statement given to This is Money, a JLR spokesman said: ‘Like other automotive manufacturers, we are currently experiencing some Covid-19 supply chain disruption, including the global availability of semiconductors, which is having an impact on our production schedules.
‘We continue to see strong customer demand for our range of vehicles. We are working closely with affected suppliers to resolve the issues and minimise the impact on customer orders wherever possible.
‘If customers have any questions, they should contact their local retailer.’
Suppliers are being told they can still place orders for stock but should not expect delivery of affected new models any time soon
The shortage of semiconductor microchips has crippled production of new cars across the globe since the pandemic struck and demand for chips from tech brands grew exponentially
In July, JLR announced pre-tax losses of £110million for the second quarter of the year from revenues of almost £5billion.
While the warning has been issued to leasing firms, the knock-on impact is also causing huge headaches for private car buyers.
The problems stem from the global shortage of semiconductor computer chips, which is ravaging vehicle makers in 2021.
Jaguar Land Rover was forced to pause production of vehicles at its UK and Slovakian car factories in April due to a lack of supplies.
In April, Jaguar Land Rover paused production of vehicles at its sites in Castle Bromwich (pictured) and Halewood, as well as in Slovakia
The state-of-the-art Nitra plant in Slovakia is where the new Defender 4X4 is being built. The new model is subject to huge demand but production is being impacted by the lack of chips
There Range Rover Evoque, which is built at the Halewood factory on Merseyside, is one of the models subject to extended delivery delays
Mini temporarily shut its Oxford plant due to chip issues earlier this year and its owning company, BMW, said in a recent update that it expects to see supply problems drag on for the rest of this year.
Volkswagen last week warned of yet more changes to production outputs in 2021 due to a worsening microchip situation, having already built 100,000 fewer cars so far this year.
Toyota, the world’s biggest vehicle producer, also said it will reduce global outputs by 40 per cent from September after its stockpiled reserves of chips depleted.
And Daimler has dialled back its delivery expectations due to the lack of supplies.
Carlos Tavares, chief executive at Stellantis – the parent company of brands including Citroen, Fiat, Jeep, Peugeot and Vauxhall – said in July that he fully expects the chip shortage to drag on into 2022 having been forced to pause production at eight of its 44 global factories in the first quarter of the year – and as a result produced 190,000 fewer cars than originally projected.
‘The semiconductor crisis, from everything I see and I’m not sure I can see everything, is going to drag into ’22 easy because I don’t see enough signs that additional production from the Asian sourcing points is going to come to the West in the near future,’ Tavares said just a month ago.
For UK car makers alone, 311,000 fewer models have come off production lines in the first half of this year. That’s down almost 40 per cent on the ten-year average and a loss of more than £8.5billion.
Electronic markers are also reporting prices for chips rocketing by up to 600 per cent in recent weeks as companies scramble to get their hands on them.
Why is there a microchip shortage?
Computer chip makers – like all other manufacturers – temporarily shut down operations when the virus first hit at the beginning of 2020.
However, massive demand from tech companies triggered a quick restart to try to fulfill sky-rocketing orders for laptops to work from home, as well as tablets, games consoles and other devices to keep people occupied during lockdown.
Though one product type that didn’t see demand return to normal levels with such an immediate effect was new cars.
With auto factories closed, showrooms locked and makers fearing a fall in big-item spending and a general tightening of consumer purse strings, automotive budgets were revised and orders for car parts – including electronics – put on hold.
Despite all this happening more than 12 months ago and production outputs of chips now back to more normal levels, car makers can’t get their hands on enough of them and backorders for cars have mounted up. This is causing headaches for anyone with intentions to purchase a zero-mile motor this year.
These chips control a number of features in modern vehicles, from safety devices like airbags to infotainment screens and automatic parking assistance.
It means individual cars – especially lavish, tech-heavy models – can use over 40 chips from varying manufacturers.
While some semiconductors needed in vehicles have been around for ages and are ‘old-hat’ in the world of chip technology – like those used for controlling the ABS braking or monitoring the exhaust emissions – others required to power complex high-definition digital displays, manage assisted-driving features and to help mitigate crashes are far more advanced. The latter are also in highest demand.
And producing specialist chips isn’t straight forward – or cheap.
Factories making them need to be ultra-clean, completely dust free and void of any static electricity. And for these reasons the production process isn’t what you’d call lightning fast.
Add to the equation that cars aren’t high on chip suppliers’ priority lists and you can begin to understand why the sector is being hit so hard.
With tech products, like smartphones and televisions, having shorter sale and life-cycles, brands developing and producing them at pace are placing the biggest orders for the latest, most expensive – and most profitable – chips going.
Given that these orders are more lucrative for semiconductor producers, car firms are being bumped down the list for the parts.
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