Shortage of microchips slowed volkswagen

Shortage of microchips slowed volkswagen

FineAuto

Volkswagen lowered its supply forecast, lowering sales expectations and warning of job cuts as Europe’s largest carmaker reported lower-than-expected operating profit due to a shortage of computer chips.

Profits showcased the pressure Volkswagen is facing in trying to switch production to electric vehicles, and Tesla is preparing to relocate to DM territory with a new plant near Berlin.

At the same time, a shortage of automotive semiconductors has plagued the industry for most of the year, and also affected the quarterly results of key competitors Stellantis and General Motors. As a result of the shortage, Volkswagen, which has charted an ambitious plan to become the global leader in electric vehicle sales, now expects shipments in 2021 to be only in line with the previous year, although growth was previously projected.

“These results further underscore the need to further improve productivity and reduce fixed costs across the volume group to remain competitive,” CEO Herbert Diess told reporters.

Revenues of Europe’s largest automaker are expected to grow significantly in 2021. Volkswagen previously expected a significant increase from the € 223 billion achieved last year, indicating stronger growth.

Chief Financial Officer Arno Antlitz said that Volkswagen now anticipated sales growth of up to 10%, and not up to 15% earlier. Shares of the world’s second-largest automaker fell as much as 4% to the bottom of the German blue-chip index.

Volkswagen, which aims to overtake Tesla as the world’s largest EV seller by mid-decade, has reaffirmed its operating margin target of 6.0-7.5% for 2021.

On Thursday, Diess expressed confidence that Volkswagen will be able to keep pace with Tesla, but added that this would require further cost cuts, including staff cuts at the Wolfsburg headquarters in western Germany.

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