(Bloomberg) —
Volkswagen AG said the supply woes on chip components that have caused massive order backlogs are easing with steady improvements expected into next year.
Availability of semiconductors will be much better during the fourth quarter and ease further “quarter after quarter” into next year, Chief Executive Officer Herbert Diess said in an interview with Bloomberg Television. There may remain “some constraints,” he said, as VW works to meet unfilled orders in the region of half a million cars.
Carmakers have faced the worst of supply issues during the third quarter after availability of chips became even scarcer following factory shutdowns in southeast Asia. Ford Motor Co. on Wednesday said the critical shortage of components had already eased, and General Motors Co. CEO Mary Barra noted the shortfall growing less severe.
Volkswagen declined 1.4% in early trading in Frankfurt. The stock has gained 67% since the start of the year.
Forecast Maintained
Volkswagen still stuck to its margin forecast, even as the unprecedented supply issues saw profit decline during the third quarter. Europe’s biggest automaker cut its forecast for annual deliveries and now sees vehicle sales in line with a year ago after expecting noticeably higher auto sales previously.
Third-quarter operating profit before special items fell 12% to 2.8 billion euros ($3.2 billion) compared with last year when pandemic-related restrictions weighed on sales, VW said.
“The results of the third quarter show once again that we must now systematically drive forward the improvement in productivity in the volume sector,” Diess said in a statement. “We are determined to maintain our strong position against established and new competitors.”
Like other carmakers, VW has navigated the chip crisis by focusing production on its most lucrative models to keep up returns with the Porsche and Audi luxury brands. Sustaining profit is vital for VW to bolster the industry’s most ambitious electric-car rollout plan and stand a chance of closing in on Tesla Inc.
The carmaker’s volume brands, like the VW namesake marque, recorded losses during the quarter, the company said.
Supply disruptions will weigh more heavily on margins at VW than on those of German peers Daimler AG and BMW AG due to higher costs, Sanford Bernstein analyst Arndt Ellinghorst said in a report this month. VW’s fixed costs at more than 30% of revenue, compared with about 25% for its peers, he said.
VW is targeting an adjusted operating profit margin between 6% and 7.5% this year.
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