Chip crisis deepens with Daimler, Jaguar warnings on sales

New York

DAIMLER 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.

Shares in the British luxury carmaker's Indian parent Tata Motors slid 8.4 per cent on Tuesday in Mumbai, their biggest drop in almost three months, while Daimler, owner of Mercedes-Benz, fell 4 per cent in Frankfurt, the biggest loss since October. Jaguar Land Rover's euro bond due January 2026 fell the most since Dec 11, Bloomberg-compiled prices showed.

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 car manufacturers to overhaul the way they get the electronic components that have become critical to contemporary vehicle design.

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.

The pair join China's biggest carmaker in cutting vehicle output as a result of the crisis. SAIC Motor trimmed its wholesale target by about 500,000 cars in the first half, Bloomberg News reported on Monday.

Other carmakers including Nissan Motor, Hyundai Motor and Volkswagen have warned that shrinking inventory will keep squeezing sales this summer.

In the United States, surprisingly, strong car demand has softened. Sales slowed from a near-record annualised pace of 18.6 million vehicles in April to 17.1 million in May and 15.7 million in June, Deutsche Bank analyst Emmanuel Rosner estimated. BLOOMBERG

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