Chip crisis deepens with Daimler, Jaguar warnings on sales

Thursday, 8 July 2021

Daimler AG and Jaguar Land Rover became the latest carmakers to warn sales will be further crimped by the global semiconductor shortage, with the latter flagging deliveries in the second quarter will be 50 per cent worse than initially thought.

A shortage of automotive chips that began late last year as consumer demand for personal devices soared amid pandemic lockdowns has persisted through 2021, raising concerns of the issue spilling into next year. The dearth is threatening to slash US$110 billion in sales from the car industry, consulting firm AlixPartners forecast in May, and has forced auto manufacturers to overhaul the way they get the electronic components that have become critical to contemporary vehicle design.

'The chip shortage is presently very dynamic and difficult to forecast,' JLR said. 'We expect some level of shortages will continue through to the end of the year and beyond.'

Jaguar Land Rover has warned that it expects the semiconductor shortage will continue to affect it beyond the end of this year.

Mercedes-Benz, the world's biggest luxury-car brand, said Tuesday that deliveries during the second quarter were 'significantly' curtailed by a lack of chips, capping its global sales increase at 27 per cent. The shortages were particularly acute last month and the carmaker expects the supply-chain crunch to persist during the coming two quarters.

* Chip shortage forces carmakers to leave out some high-end features

* Chip shortage hits global automakers

* The future of motoring is ACES: part 2

The pair join China's biggest automaker in cutting vehicle output as a result of the crisis. SAIC Motor Corp. trimmed its wholesale target by about 500,000 cars in the first half, Bloomberg News reported Monday. Other automakers including Nissan Motor Co., Hyundai Motor Co. and Volkswagen AG have warned that shrinking inventory will keep squeezing sales this summer.

The chip shortage may create some silver linings for carmakers, too. JLR said it will prioritise production of higher-margin vehicles as the crunch persists, while Ford Motor Co. has seen a paucity of new vehicles drive up prices of used cars and pad profits at its lending arm.