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Highlights:
- Sales Decline: JLR’s Q2 sales dropped by 3% due to supply chain issues, particularly a shortage of high-grade aluminium.
- Regional Performance: Strong sales in the UK and North America offset by declines in Europe and China, down 22% and 17% respectively.
- Outlook for Recovery: JLR expects production and sales to improve in the second half of the financial year as supply chain disruptions ease.
Jaguar Land Rover (JLR) reported a 3% drop in second-quarter sales, with supply chain disruptions and weakening demand in key markets like Europe and China hampering its performance. The Tata Motors-owned carmaker faced production challenges stemming from a shortage of high-grade aluminium, leading to lower output, but remains optimistic about recovery in the coming months.
Supply Chain Woes Impact Production and Sales
JLR’s sales fell to 103,108 units in the second quarter of the financial year, down 3% year-on-year, as aluminium supply shortages hindered production. The shortage was attributed to a disruption at one of its key aluminium suppliers, affecting production across several original equipment manufacturers (OEMs). As a result, production dropped by 7%, with JLR producing around 86,000 units during the quarter.
The company indicated that the aluminium shortage led to a reduction in its manufacturing capacity, which in turn affected its ability to meet global demand. However, JLR expects both production and wholesale volumes to recover in the second half of the year as the aluminium supply stabilises.
Mixed Sales Performance Across Regions
While sales in the UK and North America remained strong, with increases of 29% and 9% respectively, the company struggled in other regions. European sales dropped by 22%, and the Chinese market saw a 17% decline. These markets were affected by both supply constraints and softer demand, which contributed to the overall decline in JLR’s global performance.
Despite the challenges in the second quarter, JLR saw a 3% increase in sales over the half-year, with 214,288 units sold. The company remains optimistic about improving performance in the upcoming quarters as supply chain issues are expected to ease.
Optimism for the Future
JLR remains confident that the second half of the financial year will see stronger production and sales performance. The company highlighted that the aluminium supply chain is expected to normalise, which will allow production to ramp up and meet rising demand in key markets. As the global economy stabilises, JLR anticipates a rebound in both production and sales, particularly in markets like China and Europe, where the company has seen temporary setbacks.
