Picture Jaguar Land Rover (JLR) as a farmer, watching his crops shrivel while on the horizon a rain cloud moves frustratingly slowly towards his fields. Replace rain with cash and that’s the situation JLR has been suffering between March and June.
JLR lost over a half a billion pounds in the three months to the end of June, according to its latest figures, primarily because it was too slow building the new Range Rover and Range Rover Sport.
“This was a disappointing quarter for us,” JLR chief financial officer Adrian Mardell admitted on an investor call on Wednesday.
Both the Range Rover and Range Rover Sport are JLR’s biggest money spinners by far and it’s tempting to think because both have been revealed, the Range Rover as far back as last October, they must already be generating much needed cash for the loss-making company.
They will. But it's been a tough slog to get production up to speed at the company’s Solihull plant, south-east of Birmingham. The chip shortage has been one issue, particularly at the beginning of the quarter, which hampered JLR’s ability to build out the remaining orders for the old-generation Range Rover Sport. That meant the company couldn’t transfer factory staff to the new facility within Solihull that makes the new models.
JLR inked a new contract in the quarter with a particular chip supplier that will mean a much smoother flow of the precious semiconductors to the plant, Mardell said. “We are seeing the light at the end of a very, very long tunnel here,” he told investors.
The sheer scale of the task JLR set itself with the production of the Range Rover and Range Rover Sport has also hampered progress, Mardell said. Both cars sit on the brand-new MLA platform and JLR built a new body shop and trim assembly line for the cars at Solihull. It also needed to train enough staff to move to a third shift at the facility.
The result was that JLR built only 6000 Range Rovers and “almost zero” Range Rover Sports in the quarter. On top of that, the plant is now on its holiday shutdown, which means production won’t start again in earnest until 8 August.
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