Lockdown in China impacts auto supply chain, Q1FY23 to be monitored

by Shahkar Abidi 12 May 2022


The ongoing lockdown in China arising out of resurgence in Covid-19 is impacting auto supply chains, says  PB Balaji, Group CFO, Tata Motors during a post fourth-quarter results meeting.

In an interaction with the media, Balaji said the ongoing quarter will be keenly watched and measures taken to the best of the company's ability. 

As a result of strict restrictions imposed by China as part of its zero-Covid19 policy, freight traffic at its key Shanghai port has fallen. The development comes at a time when the world is already witnessing supply side headwinds due to the ongoing Ukraine war and semiconductor shortages.

Tata Motors has reported a consolidated net loss of Rs 1,033 crore for Q4FY22 as against Rs 7,605 crore loss during corresponding period last year. The company's revenues too declined by 11.5 percent to Rs 78,439 crore during the same period as against Rs 88,628 crore reported in Q4FY21. 

Talking about chip shortage, Balaji added that the company's UK subsidiary JLR has witnessed the maximum impact followed by passenger vehicles in India including electric vehicles. Commercial vehicles have been the least to get impacted and that too only on certain powertrains and others, he noted. Elaborating further on the issue, Balaji said that Russia-Ukraine conflict did not have much of an impact on the company's chip supplies as only  2-3 of its vendors source from the conflict zone,  which now as expected is now being rerouted.  Nevertheless, the chip shortage crisis seems to be improving with each passing month, he added.

With regard to Tata Sons Chairman N Chandrasekaran's recent announcement that the Group is working around to launch a 'battery company' which will be operational in India as well as abroad, Balaji said that “Both JLR and Tata Motors have large EV plans and could be captive customers”.

He also expressed his concerns over the rising inflation and the consequent vehicle price increases the top executive opined that if the situation continues, then at some time it may end up tapering the demand from the vehicle customers. 

Performance division-wise
Tata Passenger Vehicles (Tata PV):
 The PV business delivered a comprehensive turnaround in Q4 FY 22 with highest quarterly revenues of Rs 10,500 crore (+62 percent ),  EV volumes rose to 9100 units in the fourth quarter and the company’s PV market share improved to 13.4 percent. 

Tata CV : Tata CV business continued to show strong sequential recovery, the company said, led by the MHCV segment. The business clocked its highest quarterly revenues since Q4FY19 and grew market shares in all segments with Q4 revenues at Rs 18,500 crore (+29 percent Y-o-Y and +34 percent Q-o-Q).  In its outlook, the company said the CV industry is poised for further growth on the back of increased activity in road construction, mining and improved infrastructure spending.

Jaguar Land Rover (JLR): Revenue was £4.8 billion in Q4 FY22, up 1 percent from Q3 FY22, reflecting the higher wholesales offset partially by the impact of the runout of the previous generation Range Rover, with the New Range Rover still ramping up. The EBIT margin in the quarter was 2.0 percent with profit before tax about breakeven (£ 9 million) before £ (43) million exceptional charge for its business in Russia.