Tata Motors-owned Jaguar Land Rover on Tuesday said the global shortage of semi-conductor chips may lead to a 50 per cent drop in its wholesale volumes in the July-September quarter apart from an operating cash outflow of about £1 billion and a negative EBIT (earnings before interest and taxes) margin in the same period.

The announcement, which showed how global chip shortage continues to plague the auto industry, sent the shares of Tata Motors crashing more than 8 per cent on the bourses today. At the BSE, the scrip settled lower Rs 29.10 or 8.41 per cent at Rs 316.95 after falling around 10 per cent to Rs 311.45 during intra-day trades.

The chip shortage which has affected several industries is not going away anytime soon. JLR expects the scarcity to be greater in the second quarter ended September 2021 than in the first three months.

In a regulatory filing on Tuesday, Tata Motors said the situation was very dynamic and it was not possible to give any forecast about the future.

JLR expects the situation to improve after September but it would take another 12-18 months to clear the bottleneck, which is the time it would take for its suppliers to make the investments and produce the new chip-enabled components.

The company, therefore, expects some level of shortage to continue through to the end of the year and beyond.

Amid the supply constraints, JLR will continue to prioritise the production of higher margin vehicles with the available supply of chips.

JLR reported a 68 per cent year-on-year increase in retail sales during the April-June period at 1,24,537 units , reflecting the continuing recovery in demand from Covid-19.