High-margin Range Rover Sport (and Range Rover) will be prioritised for production, reports state
Semiconductor chips to be diverted to most profitable cars in a bid to minimise losses
Jaguar Land Rover (JLR) will reduce production of high-volume models to divert chip supplies to its most profitable cars, reports have claimed.
The company plans to cut back to one shift at its Halewood plant and part of its Solihull factory between January and March 2023, according to The Guardian.
This enables the company to prioritise production of the high-margin Range Rover and Range Rover Sport (built at Solihull), diverting scarce semiconductors, or chips, away from lower-margin models.
The move is expected to affect lead times for the Land Rover Discovery Sport and Range Rover Evoque (produced at Halewood) plus the Jaguar F-Pace and Range Rover Velar (at Solihull).
The Guardian reported Land Rover Defender production (in Slovakia) would also be prioritised, but Bloomberg said it was unaffected. Autocar Business has contacted JLR for clarification.
Addressing Solihull, the firm said in a statement: “We continue to actively manage the operational patterns of our manufacturing plants whilst the industry experiences ongoing global semiconductor supply chain disruption. Demand for our vehicles remains strong.
“We expect our performance to continue improving in the second half of the year, as new agreements with semiconductor partners take effect, enabling us to build and deliver more vehicles to our clients.”
At its last financial results presentation in October, JLR revealed it was sitting on a record 205,000 orders, primarily due to the chip shortage and rising production costs. Some 70% of those orders were for the Range Rover and Range Rover Sport, as well as the Defender, which recently gained an extended 130 variant (pictured above).
The production rethink comes after former JLR CEO Thierry Bolloré warned the semiconductor chip shortage will take “years” to resolve, shortly before he stepped down from the post, citing personal reasons.
“We should not forget that the supply of chips is really a crisis in our sector,” Bolloré told investors and analysts on the company’s third-quarter earnings call.
Adrian Mardell – then chief financial officer, now acting CEO – added that the company’s relatively small demand for chips exacerbated the problem, with some suppliers cancelling deals at short notice.
Global production volumes are down approximately four million this year through chip shortages alone, according to analyst AutoForecast Solutions.
Source: Autocar
