The microchip shortage that’s impacting everything from appliances to automakers has come to cause problems for Jaguar Land Rover, bringing dealer inventories to historically low levels and pushing wait times for new trucks up to six to twelve months.
Globally, there were 700,000 fewer cars produced by all automakers in the first quarter of 2021 than is normal. JLR lost the production ability to make about 7,000 cars in Q1 due to the shortage. Early-stage Covid lockdowns forced chipmakers to shut down, and a move towards being home had them focusing on chips for computers, televisions, and video game consoles instead of cars. But as people migrated and began to spend, they were caught with their pants down as the sudden huge demand for microchips for car computers can’t be easily dealt with in the supply chain.
JLR has met the challenge by shutting down production at times at factories, most notably the Castle Bromwich Jaguar factory and the Halewood factory that builds Discovery Sports and Range Rover Evoques. While production does continue, there are greater shortages on certain models and powertrains. In particular, plug-in hybrids (which inherently need more tech to run) have been in short supply, and the largely-European audience that’s shopping for them can look at up to a year’s wait for a custom-ordered Land Rover PHEV right now.
This also impacts the hot-selling Defender, which has over 20,000 open orders waiting to get built at the plant in Slovakia. While initial estimates were for the Defender to sell 5,000 trucks a month globally, they’ve been selling at a rate of almost 7,000 a month, with 45,244 sold in the financial year. Of those, 16,000 were sold in America.
American Land Rover inventories are at historic lows, with a 10-day supply of vehicles instead of the 90-day supply they previously had. While before the pandemic there were 35,000 Land Rovers and Jaguars waiting to find new homes in America, the number is now 10,000 to 15,000 vehicles less.
This has driven many buyers to custom order vehicles instead of buying out of dealer lot stock – a practice previously only used heavily for high-end Range Rovers. Custom ordering also leaves less room for negotiation, which has driven Land Rover dealers to record profits.
Corporate is taking note of the American situation to see how it might help to better balance production and delivery in the future, both here and around the world. JLR North America CEO Joe Eberhart is actually oddly optimistic about the lessons that are being learned here about supply and demand, and how they will impact future Land Rover sales. While this short a supply is not ideal once chip production catches up and people expect cars sooner, neither is having the kind of lingering stock on dealer lots like before. The future will likely lie in the middle, which may end up impacting how much future Land Rover buyers can talk on price with dealerships.
The world continues to take on new challenges as the domino effects of the Covid crisis tumble down, but these clouds sometimes have silver linings as we all learn that sometimes, the old ways we worked were broken and could use rethinking.
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