Mercedes-Benz, Jaguar Land Rover Warn Chip Shortages Far From Over

Chip shortages continue to plague the auto industry as Mercedes-Benz and Jaguar Land Rover have warned of increasing disruptions and revenue losses due to shortages of semiconductor chips in the second half of 2021.

Daimler AG’s Mercedes-Benz said on Tuesday that “worldwide supply shortage of certain semiconductor components affected global deliveries to customers in Q2, especially in the month of June.”

Despite these challenges, Mercedes-Benz delivered double-digit second-quarter sales growth in the U.S. of 38.6%. Globally, Mercedes-Benz delivered 1,182,724 passenger cars to customers in the first half of 2021.

Mercedes-Benz warned of how the chip shortage would affect revenue.

“The shortage is expected to continue to impact the upcoming two quarters in terms of sales,” the German automaker said in a statement.

Jaguar Land Rover also announced on Tuesday that it was hampered by chip supply chain issues, saying that sales were “lower than demand would have permitted due to semiconductor supply issues affecting the global auto industry.”

Sales in North American were up 50.5% year-on-year, with 124,537 units sold in the first quarter ending June 30.

“We are pleased to see the gradual economic recovery from the pandemic with customers returning to our showrooms driving double-digit year-on-year sales growth in all regions, demonstrating the continuing appeal of Jaguar and Land Rover vehicles,” Thierry Bollore, CEO at Jaguar Land Rover, said in a statement.

“While the present semiconductor supply shortages continue to be a challenge for the industry, we are encouraged by the strong demand we see for our vehicles,” the statement read.

The automaker said it expects chip shortages to be even greater in the next quarter of the year, resulting in a sales loss of about 50%, but Jaguar said it is “continuing to work to mitigate this.”

Bollore said: “The present semiconductor supply issues represent a significant near-term challenge for the industry which will take time to work through but we are encouraged by the strong demand we see for when supply recovers. We are taking strong steps to ensure the security of our supply chain for the future, working with our suppliers and chip manufacturers directly to increase the visibility and control over the chip supply for our vehicles.”

Chip shortages have plagued the auto industry since December when consumer demand ramped up during the pandemic for tech products that also use the chips in their devices.

Other manufacturers such as Ford and GM have cited similar losses to production and revenues due to the chip disruptions.

Ford has said it anticipated its earnings to be reduced by about $2.5 billion in 2021, while GM said that plant shutdowns from chip supply shortages will cut into its operating costs by as much as $1.5 to $2 billion this year.

According to consulting firm AlixPartners’ May forecast, the chip shortage is threatening to cut $110 billion in sales from the auto industry, as reported by Bloomberg.