Automobile

VW in “crisis mode” over chip shortage

Volkswagen chief Herbert Diess has said the carmaker was in “crisis mode” over an ongoing lack of badly needed automotive chips, adding the impact of the shortage would intensify and hit profits in the second quarter.

Speaking after bumper results for the first three months of the year, during which operating profits increased more than five fold, Diess said the bottleneck would “substantially burden earnings” in the quarter to June, Reuters reported.

“We will do everything to offset a significant amount of the lost cars in the second half of the year,” Diess told Reuters. “But the incidents in the US (storm disruption) and in Japan (Renesas fire) will hurt us definitely.”

Diess said while the problem had cut production by around 100,000 cars in the first quarter, there was more to come.

“We’re still tasking our supply chain people to recover the losses of quarter two, which we expect,” he said.

Volkswagen shares were down 2.8%.

To secure supplies over the longer-term, the German group was talking directly to chipmakers including NXP Semiconductors and Infineon, as well as foundries such as Taiwan Semiconductor Manufacturing , Diess told Reuters.

“We are, for sure, in crisis mode,” he said.

Despite the crunch, Volkswagen raised its operating margin target for this year after strong demand for Audis and Porsches in the first quarter.

It now expects an operating profit margin of 5.5-7%, up from a previous forecast of 5.0-6.5%, Reuters said.

During the first quarter, deliveries of Porsches and Audis both rose by about a third year on year, Volkswagen has said. Sales of electric vehicles more than doubled to 133,300 vehicles.

Volkswagen’s operating profit was EUR4.8bn (US$5.8bn) in January-March, helped by cost cuts and higher sales, versus EUR900m in the same period last year, which was hit by the COVID-19 pandemic, Reuters noted.


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