VW joins U.S. competitors with rosy outlook on chip crisis
Volkswagen AG joined Stellantis NV and U.S. competitors in voicing optimism that the severe semiconductor shortage decimating production may have peaked.
VW said it has moved past the worst of the availability issues that have snarled production lines globally. Supply of the components is likely to improve “quarter after quarter” into next year, VW Chief Executive Officer Herbert Diess said in an interview with Bloomberg Television.
Since the delivery woes on semiconductors emerged late last year, executives regularly made upbeat comments that supplies would quickly return to normal. It hasn’t panned out this way. Factory fires, winter storms and renewed coronavirus outbreaks restricting chip factory operations have instead made a dire situation worse and wait times have stretched even longer.
That sunny view contrasted with one offered by Samsung Electronics Co. The major producer and consumer of chips for computers and mobile devices said it expects the tight supply that’s hurting industries worldwide to persist through next year. Telecommunication network equipment maker Nokia Oyj also said it struggled to make an assessment on how supply would develop next year.
Carmakers were more upbeat. General Motors Co. Chief Executive Officer Mary Barra said Wednesday she’s optimistic the carmaker is through the worst of the chip shortage, while Ford Motor Co. said the protracted shortage has already eased with further improvements expected through next year.
As the constraints drags on, Volkswagen’s order backlog is likely to balloon to around half a million vehicles by the end of the year, according to Diess. He expects “some constraints” on chip availability to remain into 2022, he said.
Volkswagen fell 3.4% as of 2:26 p.m. in Frankfurt.
The German stuck to key forecasts, even as the unprecedented supply issues prompted VW to cut delivery and revenue expectations. VW now anticipates revenue growth of as much as 10% instead of as much as 15% previously, Chief Financial Officer Arno Antlitz said.
Volkswagen’s operating profit before special items fell 12% to 2.8 billion euros ($3.2 billion) during the period, below even last year, when pandemic-related restrictions weighed on sales.
Carmakers have navigated the chip crisis by focusing production on their most lucrative models to keep up returns. Profit at VW’s Porsche and Audi luxury brands has jumped, offsetting losses at its five mass-market nameplates.
Sustaining cash flows is vital to bolster the industry’s ambitious electric-car rollout plan and stand a chance of closing in on Tesla Inc.