Automakers continue to see chip-supply carnage as vendors talk of sales pain

Jaguar Land Rover, the custodian of those iconic British car brands owned by India's Tata Motors, this week announced lost £9m in the final quarter of 2021 in part down to the global semiconductor shortage which followed the start of the COVID-19 pandemic. JLR said retail sales fell nearly 38 per cent on a year earlier, …

[NorthernCoder]

Two Volvos, with different CEOs

"Announcing results last week, Volvo said it saw sales fall by 20 per cent amid the chip shortage.

Speaking to investors, Martin Lundstedt, CEO, said: "The fourth quarter was yet another quarter characterised by the shortages of material, mainly related to semiconductors and also then the lack of capacity, including freight."

The link in the first sentence refers to Volvo Cars, but Martin Lundstedt is CEO of Volvo Group, i.e. trucks, buses.

[wolfetone]

"Jaguar Land Rover, the custodian of those iconic British car brands owned by India's Tata Motors, this week announced lost £9m in the final quarter of 2021 in part down to the global semiconductor shortage which followed the start of the COVID-19 pandemic."

Of course the loss is down to chip shortages.

It has absolutely nothing to do with:

- poor build quality

- poor quality control

- poor management of line staff building the cars

- poor design of the components used

- poor direction from management staff

I've been behind a chap at the petrol station in his brand new Range Rover - 20 miles on the clock, just picked up from the dealership - with diesel gushing out of the underside of the vehicle as he's filling it up. Why? The car is saying it's out of diesel, yet they hadn't bothered to connect the fuel tank properly.

A friend of mine works on the line for JLR, and he's 5ft 9. He's tasked with fitting a specific part on to a Range Rover (not the fuel tank I might add!), and he can't reach it. He has to strain and contort his body in order to fit it, resulting in hurting his back which then results in him going on sick for 2 months. When he returns, even after the obligatory health and safety check with occupational health, they stick him back on the same job - even though they have noted and said that he's physically unsuited to the job. A week later his back is gone again, and he's off for 2 months.

Every car JLR build goes on a run. Specific employees get the keys to these cars and take them for a mixed run. Slow speeds, then fast speeds on various roads around the factory. It's been known that these idiots thrash the cars in to hedges etc, scuffing/scraping the paint along the sides of the cars. Instead of owning up to it, they park the cars in a part of the car park next to skips, so that they can say they didn't damage the car but loading of the skips did.

I could go on, but it's ridiculous really for JLR to point their loses on chip shortages when they have far more endemic, entrenched issues at hand that they're not addressing.

[Neil Barnes]

But they are merely demonstrating the good UK traditions of quality at all stages, that has lead British Leyland to be the world beater that it is!

[Stork]

Now now- the best built car I’ve had was a Honda Accord 1994 (same as Rover 600). When I sold it with 340000 on the clock the ice scraper was still the only thing that rattled

[Anonymous Coward]

This of course is the same JLR who didn't notice someone stealing a fully loaded trailer of engines...

[wolfetone]

When my friend started about 8 years ago, they found out someone had a fully built Land Rover Defender at their house. They had been lifting parts from the site and bringing it home. It was fully built too, minus some wheels, and it was the wheels that got him caught.

Not the engine, chassis, and other large items. No, the wheels!

[werdsmith]

One piece at a time. 1976. Johnny Cash.

Since that song came out, many similar urban legends have been born.

[Ms123]

Jeasus, it reminds of Fiat in the 70's when some workers went on strike and many FIAT 132 cars were delivered to dealers with no tank at all

[Anonymous Coward]

A JLR-only issue, or a more general GB issue? as outlined by Boris' Bunch:

https://www.newstatesman.com/politics/2019/06/britannia-unchained-free-market-book-defines-boris-johnson-s-new-cabinet

'The 152-page book excoriated the UK’s “bloated state, high taxes and excessive regulation” and, most memorably, derided British workers as “among the worst idlers in the world” (“We work among the lowest hours, we retire early and our productivity is poor. Whereas Indian children aspire to be doctors or businessmen, the British are more interested in football and pop music.”) The UK, it declared, should “stop indulging in irrelevant debates about sharing the pie between manufacturing and services, the north and the south, women and men”. '

(Full Disclosure: I ran a brand new Range Rover from 2012 to 2016. Only ever went in for services. Zero defects.)

[Snake]

"Half a grand higher"

Sales down because buyers are paying "half a grand" over retail?

Hah!

Sales are down because there are dealers asking thousands over retail. 2 days ago I happen to look at the listings for the new Ford Maverick, and one dealer was asking $44,000 for one, for a Lariat version that lists at $28,360 MSRP plus options (and you can't pad the bill that far because the Lariat is already the top model with most of the extras built-in).

Where did they get those fantasy numbers??

[Anonymous Coward]

Re: "Half a grand higher"

Dealerships are out of control - Donut Media - Youtube

[Jay 2]

A friend of mine very recently sold his Range Rover as it was getting very close to the end of the original warranty plus his car requirements had changed a bit. After shopping around to see who would cough up the most it turned out to be a JLR dealer. It was in pretty good condition, not silly mileage and had a full dealer service history. So I'm sure with a quick clean etc then they'll be able to shift it whist waiting for some new vehicles to trickle out of the factory.

[John Brown (no body)]

a 48 per cent increase in operating profit on flat sales

That's interesting. Sounds like the gas industry. Demand is up so prices hike while costs remain the same and the owners/shareholders make out liker bandits.

[Stork]

Re: a 48 per cent increase in operating profit on flat sales

I don’t see anything wrong in this case. Toyota has prepared well and can deliver when others can’t. If you don’t like the price, keep your old car a bit longer, buy second hand or a cheaper model.

[martinusher]

Re: a 48 per cent increase in operating profit on flat sales

I can do this because I live in California, a state where vehicles don't rust and where we don't have mandates to take older vehicles off the road. Others may not be so lucky.

Incidentally, the average age of a car in the US is about 10 years.

(Also -- 'flat sales' aren't just an automotive problem. Due to conservation and solar panel use the electricity utilities are not seeing the profits they would like. Their response is to lobby the utilities commission for rate changes, including a standing charge of $48 a month for people who have solar panels. The rationale for this is "to maintain the network" which deftly skates around the fact there's already a network charge. Its not relevant to this discussion except you can see the full range of PR tools at work if you follow it.)

[Stork]

Re: a 48 per cent increase in operating profit on flat sales

Interesting, you learn stuff every day.

With average age, is that how old they get before scrapping or really the average? I remember reading that in Denmark, where card definitely do rust, the average lifetime of a car was about 13 years, similar elsewhere in Scandinavia.

Are there states where 2nd hand dealer are out of stock?

[werdsmith]

Re: a 48 per cent increase in operating profit on flat sales

Modern cars, I’m my experience, don’t rust. Even in UK’s maritime wet climate.

[martinusher]

Chip shortage is just noise?

As a Californian I'm used to PR types trotting out this week's excuse for price rises. We get this all the time with commodities, especially gasoline (petrol), in fact its got to be so much of a joke that the refiners just don't bother any more, they just hike the prices "because they can". (Its called 'market power'.)

There are probably chip shortages, or as we call them in industry, "long lead times". That's what you've got production planners for. This doesn't explain the rampant price hikes -- what we call price gouging -- which, like our gas prices, are little to do with price fluctuations and everything to do with finding out how much the market can bear.

Another factor may be in play with car sales. You'll recall an automotive executive mentioning recently that they expect recurring software licensing fees to be a significant contributor to net profits in the future. So far the only major automaker that hasn't embraced this is Toyota -- they've dipped their toe into the water and got a negative reaction. This will influence this consumer -- we are in the market for a replacement car but as sales of new vehicles (especially) tend to be exercises in "spot the scam" we're just carry on with our 10+ year old vehicles until an honest opportunity presents itself.

[Jan 0]

Meanwhile, maybe JLR could turn a little profit by reviving some pre-chip models for the nostalgia market.

[ShadowSystems]

I was wondering...

How well a station wagon (estate car?) would sell if it were made with as little electronic frippery as possible.

Hydrolically augmented brakes & steering, but manual windows & locks, no "infotainment center" that's a giant touch-screen tv in the middle of the fekkin dash, just an AM/FM stereo head unit with push buttons, push button dash controls, warning lamps on the instrument cluster for engine temp, oil temp, etc, but as *manual* (not electronic) a car as possible.

The base model would be a "few frills" auto that used safety instead of PR bollocks (EG: seat belts & airbags instead of "anti collision radar" or "lane assist intelligent cruise control" crapola), with ever increasing levels of trim/electronic wankery available as the customer could desire.

Just a basic car, basic safety features, and a manually tuned engine that any shade tree mechanic worth their tools could repair with confidence.

How might such an offering fare?

I'm blind & can't drive, but if I could still see to do so, I'd be scouring the used car ads for anything old enough to be more mechanical perfection than mere electronic wanker-waving...

[Stork]

Re: I was wondering...

Very few. Apart from the problem of emission control, most people like “shiny”. And long term reliability is someone else’s problem

[werdsmith]

Re: I was wondering...

Some have tried the simple no frills approach. Dacia. But even they are becoming loaded with toys now, because the market demands it.

[newman]

Why has no automaker considered a free option of just not bundling s... nobody has really asked for? Seemingly good for everyone and less crap would end up in landfills. Is it because this would go against the planned obsolescence paradigm of the product they try to push onto consumers?

[Anonymous Coward]

highly paid business consultants earning their bonuses

it amazes me that the whole Western business consultant lot haven't been thrown into the Atlantic.

they seem to copy the Japanese rather than come up with new ideas, yet somehow they screw it up in the delivery because most of them are bloody useless.

They can't do a REAL job, so they become a "business consultant". Anyone with 1/2 a brain would tell you that when you move from "Just In Case" to "Just in Time", you need to hedge your bets with suppliers and look through the entire supply chain to ensure that if 1 supplier can't deliver, it doesn't feed all the way through. Even with the chip shortages, I bet CEO's are still taking home their bonuses and multi million $ pay checks.

We've had earthquakes in the 90s taking out Memory chip factories, we've had ships stuck in the Suze Canal. We've had volcanoes stopping flights and obviously COVID.

Yet at NO point do we see Western firms actually learning a lesson and spending a tiny bit more money to secure their supply chains.

It's crazy and annoyingly predictable.